FOR RETIREMENT PLANS AND IRAS J.D., LL.M. Petrie... · ESTATE PLANNING FOR RETIREMENT PLANS AND...
Transcript of FOR RETIREMENT PLANS AND IRAS J.D., LL.M. Petrie... · ESTATE PLANNING FOR RETIREMENT PLANS AND...
Copyright 2013, Gair B. Petrie
ESTATE AND INCOME TAX PLANNING
FOR RETIREMENT PLANS AND IRAS
BY: GAIR BENNETT PETRIE
J.D., LL.M.
RANDALL | DANSKIN
1500 Bank of America Financial Center
Spokane, Washington 99201-0653
(509) 747-2052
GAIR B. PETRIE is a shareholder in the law firm of Randall | Danskin, P.S. in Spokane,
Washington. He graduated from Gonzaga School of Law and received an LL.M. in federal
taxation from the University of Florida. His primary areas of practice include estate planning,
qualified and non-qualified retirement plans and compensation related matters. Mr. Petrie is a
frequent lecturer at continuing legal education programs for Idaho, Washington and Oregon
Lawyers and Certified Public Accountants. In addition, he has published several articles in
national publications dealing with estate planning and qualified retirement plan issues. He taught
estate planning as an adjunct professor of law at Gonzaga School of Law for over 20 years.
Mr. Petrie is a Fellow in the American College of Trust and Estate Counsel ("ACTEC").
Date Revised:
February 2013 F:\Users\Gair\Seminars\Seminar Presentation WSBA 02.08.13 tracked changes.doc
Copyright 2013, Gair B. Petrie
CHAPTER 13
ESTATE PLANNING FOR RETIREMENT PLANS AND IRAS
Gair Bennett Petrie
Summary
§13.1 Scope and Coverage
§13.2 Income Tax Factors
(1) Minimum Distribution Rules
(a) Required Beginning Date
(b) Distributions While the Participant is Living
(c) Distributions After Death
(d) Spouse
(e) Nonspouse Individual Beneficiary
(f) Non-Individual (or No) Designated Beneficiary
(g) Multiple Beneficiaries
(h) Separate Accounts / Quasi-Separate Accounts
(i) Trusts as Beneficiary (Multiple Beneficiaries and the "Conduit Trust")
(j) Beneficiary's Right to Name a Beneficiary/Transfer Account
(k) Non-Spouse “Rollover”
(l) Excess Distributions
(m) Penalties for Failure to Meet MDIB
(n) Liquidity Planning
(2) Income in Respect of a Decedent (IRD)
(3) Early Distribution Penalty, I.R.C. §72(t)
(4) Roth IRAs
§13.3 Estate Tax
(1) Disclaimer
(2) Funding the Credit Trust; Non-Pro Rata Distribution Planning
(3) QTIP Trust
(4) Charity as Beneficiary
§13.4 Gift Tax
§13.5 Spousal Protection Under ERISA
§13.6 Community Property
§13.7 Creditors' Claims
§13.8 Inherited IRA
The author expresses no legal, tax, or other opinions herein or with regard to the forms
appearing as appendices (or any other forms attached to this Article). Also, the author takes
no responsibility for misstatements or errors that may appear herein as these materials cannot
be relied upon as research materials. The following should only be used upon a thorough
review of the client’s facts and applicable law. Moreover, the reproduction of
Reg. 1.401(a)(9)-9 appearing at Appendix I is for illustrative purposes only and, due to
possible updates and computer glitches, only the actual regulation from a service publishing
the same should be used to make a calculation
Copyright 2013, Gair B. Petrie - 1 -
§13.1 SCOPE AND COVERAGE
This chapter will analyze the complicated interplay between various federal and
Washington state laws that the planner must take into consideration in planning with a client's
tax-qualified retirement plan or IRA. Throughout this chapter, references to the Internal
Revenue Code, Title 26 U.S.C., will be indicated as I.R.C., and references to Treasury
Regulations, Title 26 C.F.R., will be indicated as Treas. Reg.
§13.2 INCOME TAX FACTORS
This section discusses the principal income tax factors that should be considered when
selecting the beneficiary of the working spouse’s account.
(1) Minimum distribution rules
Assets held by a qualified retirement plan or individual retirement account (IRA) are
allowed to grow without being subject to the income tax until distributed to the participant or the
participant’s beneficiary. I.R.C. §501(a). Thus, clients who do not need current distributions to
provide for their support will generally choose to defer receiving distributions as long as
possible. Because the primary purpose of exempting the accounts from the federal income tax
was to allow taxpayers to accumulate the funds needed for support in retirement, the law
includes a complex set of rules that are intended to assure that funds in a retirement account are
used for that purpose. I.R.C. 401(a)(9). Clients will most often wish to preserve the option of
allowing the funds in an account to grow for the longest possible period. Income tax deferral, of
course, is subject to the minimum distribution rules of I.R.C. 401(a)(9) and final Treasury
Regulations issued thereunder. The minimum distribution rules establish when distributions
must begin and the methodology by which minimum required distributions are calculated both
before and after the account holder’s death.
RMD Holiday for 2009. The Pension Act of 2008 added IRC §401(a)(9)(H) under which
no RMD is required for the 2009 calendar year from tax-qualified retirement plans under
IRC §401(a), 403(b) plans, 457(b) plans of governmental entities (but not 457(b) plans of
tax-exempt organizations) and IRAs.
For an account holder who had an RMD requirement in 2009, the 2009 distribution was
simply missed and the account holder commenced again in 2010 based on the account
holder’s age in 2010 under the Uniform Lifetime Table.
The RMD holiday also applied to inherited IRAs so that an IRA beneficiary who would
otherwise have an RMD requirement for the 2009 calendar year, did not have to take the
2009 RMD. Although there was no RMD in 2009, the divisor for the 2010 RMD and
each year’s RMD thereafter is still calculated as though the 2009 RMD occurred. In
other words, the divisor is still reduced by one (1) for 2009.
If an inherited IRA was subject to the five (5) year payout rule, calendar year 2009 was
disregarded effectively extending the five-year rule by one year.
(a) Required beginning date
Copyright 2013, Gair B. Petrie - 2 -
Under I.R.C. §401(a)(9), distribution must begin not later than the “required
beginning date.” Generally, the required beginning date is April 1 of the calendar year following
the calendar year in which the participant attains the age of 70 1/2 without regard to the actual
date of retirement. However, an individual, other than a five-percent owner (defined at I.R.C.
§416), may defer commencement of distribution from a retirement plan (but not an IRA) until
April 1 of the calendar year following the calendar year during which the individual terminates
employment. I.R.C. §401(a)(9)(C). An individual is a five-percent owner if he owns, with
application of the attribution rules of I.R.C. §318, more than five percent of the employer.
Moreover, a different required beginning date may apply if an old “§242(b)(2) election” is in
place. Treas. Reg. 1.401(a)(9)-8, Q-13, A-13.
For the purpose of determining the required beginning date, an employee attains
the age of 70 1/2 on the date that is six months after the 70th anniversary of that employee’s
birth. Treas. Reg. 1.401(a)(9)-2, Q-3, A-3.
Generally, the participant’s first “distribution calendar year” is the year the
participant attains the age of 70 1/2. Treas. Reg. §1.401(a)(9)-5, Q-1, A-1(b). Thus, if a
participant attains the age of 70 1/2 in 2005, and under the required beginning date rules defers
the initial distribution until 2006, two minimum distributions must occur in 2006. The minimum
distribution for 2005 must occur by April 1, 2006, and the minimum distribution for 2006 must
occur before December 31, 2006.
Distributions pursuant to a valid TAX EQUITY AND FISCAL RESPONSIBILITY ACT
(TEFRA) §242(b)(2) election do not have to comply with the required beginning date rule.
Treas. Reg. §1.401(a)(9)-8, Q-13, A-13. A TEFRA §242(b)(2) election was a transitional
election that could only be made on or by December 31, 2003. The election, if properly made
and if not revoked, could permit an account holder who is a more than five percent owner of an
employer to defer the required beginning date under the employer’s retirement plan until the
calendar year following the calendar year of retirement.
(b) Distributions while the participant is living
When the account holder is alive on his required beginning date, minimum
distributions are made with reference to the Uniform Lifetime Table of Treas. Reg. §1.401(a)(9)-
9. This table is as follows:
Uniform Lifetime Table
Age of Account Holder Distribution Period
70 27.4
71 26.5
72 25.6
73 24.7
74 23.8
75 22.9
76 22.0
77 21.2
Copyright 2013, Gair B. Petrie - 3 -
Age of Account Holder Distribution Period
78 20.3
79 19.5
80 18.7
81 17.9
82 17.1
83 16.3
84 15.5
85 14.8
86 14.1
87 13.4
88 12.7
89 12.0
90 11.4
91 10.8
92 10.2
93 9.6
94 9.1
95 8.6
96 8.1
97 7.6
98 7.1
99 6.7
100 6.3
To properly apply the Uniform Lifetime Table, the attained age of the account
holder in the year in question is used. For example, if the account holder was born in the first
half of the year, then he or she will have only attained age 70 in the year he or she reaches age
70 1/2. The first minimum distribution would be 1/27.4. If, by contrast, the account holder’s
birthday was in the second half of the calendar year, then he or she would have attained age 71 in
the first distribution calendar year and the first minimum distribution would be 1/26.5.
The applicable divisor under the Uniform Lifetime Table is applied to the account
balance as of the last valuation date in the calendar year immediately preceding the distribution
calendar year. For example, if the account holder attains age 70 1/2 in 2010 but defers the first
minimum distribution until April 1, 2011, assuming a calendar year plan (or an IRA), the
valuation date for the first minimum distribution would be December 31, 2009 (for the 2010
minimum distribution deferred to the required beginning date) and December 31, 2010 (for the
2011 minimum distribution required by December 31, 2011). Treas. Reg. §1.401(a)(9)-5, Q-3,
A-3(a). It should be noted that, in the case of a qualified plan on a fiscal year, adjustments may
be made for contributions or distributions following the valuation date during the calendar year
containing the valuation date. Id. However, in the case of an IRA maintaining its records on the
calendar year, contributions or adjustments following the December 31 date will not affect the
account balance to be used in determining the appropriate minimum distribution for that calendar
year. Thus, if one were calculating the minimum distribution for the 2010 calendar year with
respect to an IRA, contributions after December 31, 2009 would be disregarded in determining
Copyright 2013, Gair B. Petrie - 4 -
the account balance. Of course, distributions in 2010 would be applied against any further
required minimum distribution.
The identity of the account holder’s designated beneficiary on the required
beginning date is irrelevant with one exception. If the spouse is the sole beneficiary of an
account (or when the spouse is the sole beneficiary of a separate account under Treas. Reg.
§1.401(a)(9)-8, Q-2, A-2), and the spouse is more than ten years younger than the account
holder, the actual joint life expectancy of the participant and spouse under Treas. Reg.
§1.401(a)(9)-9, Q-3, A-3, recalculated annually (only during the couple’s lifetime), may be used.
Treas. Reg. §1.401(a)(9)-5, Q-4, A-4(b). The regulations specify that marital status is determined
on January 1 of each year. Treas. Reg. §1.401(a)(9)-5, Q-4, A-4(b)(2). Thus, if the exception is
being used and the spouse dies (or the couple divorces) during the calendar year, the account
holder would, in the succeeding calendar year, switch to the Uniform Lifetime Table.
To illustrate the effect on the minimum distribution calculations of tying the
required beginning date to age 70 1/2, consider the following: If an account holder’s date of
birth is June 30, 1936, the 70th anniversary of the account holder’s birth is June 30, 2006. The
account holder attains the age of 70 1/2 on December 30, 2006. In such case, the account
holder’s first minimum distribution would be due not later than April 1, 2007, and would be the
account balance on December 31, 2005, divided by 27.4. If, instead, the account holder’s date of
birth was July 1, 1936, he or she would be age 70 1/2 on January 1, 2007. This would push the
required beginning date off to April 1, 2008; and, because the account holder attained age 71 in
the year he or she reached age 70 1/2, the first minimum distribution would be the December 31,
2006, account balance divided by 26.5.
(c) Distributions after death
Under Treas. Reg. §1.401(a)(9)-5, Q-4, A-4, minimum distributions essentially
accrue on January 1 of each calendar year. Thus, in the year the account holder dies, the
minimum distribution for that year will be calculated under the Uniform Lifetime Table and
distributed no later than December 31 of the year of death. Depending on the language of the
applicable plan or IRA document, this distribution belongs to the designated beneficiaries and is
taxed to those beneficiaries. As discussed below, postdeath distributions commence in the
calendar year following the calendar year of death. In sum, if an account holder dies after his or
her required beginning date, there is still a minimum distribution for the year of death in addition
to the minimum distribution required for the year after death and each year thereafter. As
discussed below, Rev. Rul. 2005-36 permits a beneficiary to receive the decedent’s final RMD
without such receipt disqualifying a later disclaimer.
The regulations under §401(a)(9) unify, with a few exceptions, the rules applying
to the account of a participant who dies either before or after the required beginning date. The
key issue is the identity of the beneficiary whose life expectancy, determined under Treas. Reg.
§1.401(a)(9)-9, Q-1, A-1, will be used to calculate minimum distributions following the death of
the account holder. The beneficiary may be identified in the beneficiary designation of the
account holder or pursuant to the terms of the custodial account agreement or the plan (i.e.,
default provisions). Treas. Reg. §1.401(a)(9)-4, Q-1, A-1. Beneficiaries may be designated by
Copyright 2013, Gair B. Petrie - 5 -
class (i.e., children) as long as the class member with the shortest life expectancy at the time of
the account holder’s death is identifiable. Id.
There are really only two differences between death before versus death after the
required beginning date: (i) if the account holder dies before the required beginning date and
there is no designated beneficiary as described below (or if there is a beneficiary and the plan or
IRA so mandates), the entire account must be distributed within five years under Treas. Reg.
§1.401(a)(9)-3, Q-2, A-2 (known as the “Five Year Rule”), and (ii) if the designated beneficiary
is the surviving spouse, he or she may defer commencement of minimum distributions until the
account holder would have reached age 70 1/2 under Treas. Reg. §1.401(a)(9)-3, Q-5, A-5.
Otherwise, the postdeath distribution rules are essentially unified regardless of whether death
occurred before or after the required beginning date. It should be noted that the terms of the plan
or the IRA custodial agreement may elect or require the Five Year Rule in the case of the
account holder dying before his or her required beginning date, although such language is
becoming rare. Moreover, sometimes the plan language permits the beneficiary of an account
holder who dies before his or her required beginning date to elect the Five Year Rule in
accordance with the terms of the plan or IRA document.
In private letter ruling 200811028, an IRA owner died before his required
beginning date with a child as his designated beneficiary. The IRA stated that, if the account
holder died before his required beginning date, RMDs will be computed over the designated
beneficiary’s life expectancy with the first such distribution to occur by December 31 of the
calendar year following the calendar year of the account holder’s death all in accordance with the
regulations. The IRA document went on to say that the beneficiary may elect distributions in
accordance with the five-year rule wherein the entire IRA must be distributed by the end of the
fifth calendar year following the calendar year of death. In this case, the beneficiary missed the
RMD for the first two calendar years after the calendar year of the account holder’s death.
However, when the beneficiary realized the mistake, makeup RMDs were immediately taken and
the 4974(a) 50% penalty paid. The issue was whether the beneficiary may compute RMDs over
the beneficiary’s life expectancy or whether failure to take RMDs in the first couple of years
when they were required constituted an election of the five-year rule.
The IRS focused on the language of the IRA. The default rule under the IRA was the life
expectancy rule with the five-year rule being elective. The IRS concluded that the
beneficiary had done nothing to affirmatively elect the five-year rule and therefore
permitted the life expectancy RMD calculation.
The regulations impose a key date of September 30 of the calendar year following
the calendar year of death. If a beneficiary receives payment of his or her portion of the account
before the September 30 date, the beneficiary will be disregarded. Treas. Reg. §1.401(a)(9)-4,
Q-4, A-4(a). If the beneficiary named as of the account holder’s death disclaims in favor of a
successor beneficiary, the successor beneficiary’s life expectancy will control. Id. Interestingly,
the regulations specify that if a named beneficiary dies between the account holder’s death and
the September 30 date, the successors to the deceased beneficiary will use the deceased
beneficiary’s life expectancy to determine minimum distributions. Treas. Reg. §1.401(a)(9)-4, Q-
4, A-4(c). It does not make sense that a child could disclaim in favor of a grandchild whose
significantly longer life expectancy would then be used, whereas if the child were to die before
Copyright 2013, Gair B. Petrie - 6 -
the September 30 date, the grandchild would be stuck with the child’s life expectancy. Of course,
one might consider having the estate of the deceased child disclaim on behalf of the child. The
regulations, however, require disclaimer by the named beneficiary before death. Id.
The regulations make clear that one cannot go beyond the beneficiary designation
in the applicable document (i.e., plan or IRA document) to determine the beneficiary. Id. Thus,
an individual who is entitled to a portion of the account under a will “or otherwise under
applicable state law” is not a designated beneficiary. For example, if the designated beneficiary
(either by terms of the beneficiary designation or the applicable plan or IRA document) is the
estate of the account holder, an individual entitled to all or a portion of the estate by reason of a
will or intestacy laws will not be considered the beneficiary for purposes of calculating minimum
distributions. Rather, the estate will be considered the beneficiary. As described below, this
may have serious ramifications.
If an account holder dies before his/her required beginning date, the first
distribution calendar year is the year in which the initial distribution is required to be made to the
designated beneficiary (December 31 of the calendar year following the calendar year of death,
unless the surviving spouse is the sole beneficiary, in which case distribution may be deferred
until December 31 of the calendar year in which the participant would have attained age 70 1/2).
Treas. Reg. §1.401(a)(9)-5, Q-5, A-5(a).
With the above rules in mind, let’s examine the applicable distribution period for
certain beneficiaries.
(d) Spouse
If the spouse is the designated beneficiary, that spouse may always roll over his or
her interest in the plan or account into an IRA in his or her name, in which case the minimum
distribution rules apply to the spouse as the account holder. If a spouse will not complete a
rollover, there are several different rules that may applicable.
If the account holder passed away before his or her required beginning date and
the spouse is the sole beneficiary of the account, the spouse may defer commencement of
distribution until the end of the calendar year in which the participant would have reached
70 1/2. Treas. Reg. §1.401(a)(9)-3, Q-3, A-3(b). This rule only applies when the spouse is the
sole beneficiary of the account. However, if under Treas. Reg. §1.401(a)(9)-8, Q-2, A-2 the
spouse is one of several beneficiaries and his or her interest in the account is segregated during
the calendar year following the year of the participant’s death, the spouse will be deemed as sole
beneficiary of a separate account and this special deferral rule should apply.
If a surviving spouse is under 59 1/2 years of age and completes a rollover,
withdrawals taken before 59 1/2 are subject to the 10% penalty of IRC §72(t). Sears v. Comm’r
100 T.C.M. (CCH) 6 (T.C. 2010). Thus, a spouse under 59 1/2 may wish to wait until 59 1/2 to
complete the rollover so withdrawals may be taken by him or her before such time without the
10% penalty under §72(t)(2)(A)(ii) exception for distributions from a decedent’s account.
Under Treas. Reg. §1.401(a)(9)-4, Q-4, A-4(b), if the account holder dies before
his or her required beginning date, and the spouse does not rollover to an account of his or her
Copyright 2013, Gair B. Petrie - 7 -
own and the spouse dies before the end of the year the account holder would have attained age
70 1/2, then the beneficiaries of the spouse will be treated as beneficiaries for RMD purposes.
This is an unusual rule but does have a practical application in at least one setting. Assume the
surviving spouse is under 59 1/2 and does not wish to complete a rollover so that he or she may
take distributions from the decedent’s account free from the 10% penalty of IRC §72(t). In this
case, should the young surviving spouse die before the end of the calendar year the deceased
account holder would have been age 70 1/2, the spouse’s beneficiaries will be treated as
beneficiaries for RMD purposes.
Caution! Assume you are handling an estate of a deceased spouse who died after
his or her required beginning date designating the surviving spouse as beneficiary of an IRA.
Even though there is no time limit during which a rollover must be completed, your delay in
processing the rollover carries with it some risk. If the surviving spouse dies before he or she
completes the rollover, the children of the couple will be forced to take RMDs over the
remaining life expectancy of the surviving spouse. Instead, had a rollover been accomplished
before the surviving spouse’s death (and the children designated as beneficiaries of the IRA), the
children would have been able to take RMDs over their respective life expectancies. The IRS
has long had the position that the estate of a surviving spouse may not complete a rollover. PLR
9237038.
If the account holder dies after the required beginning date with the spouse as the
sole beneficiary of the account, and the spouse does not complete a rollover, the applicable
period for the distribution will be the spouse’s life expectancy, recalculated annually; but, after
the spouse’s death, that life expectancy will revert to the remaining unrecalculated life
expectancy of the spouse. Treas. Reg. §1.401(a)(9)-5, Q-5, A-5(c)(2). If the spouse is one of
several beneficiaries of the IRA, this special treatment will only apply if the separate account
rule of Treas. Reg. §1.401(a)(9)-8, Q-2, A-2 applies.
To the extent the surviving spouse is the beneficiary of the working spouse’s
account, he or she may roll over all or any portion of the death distribution to an IRA in his or
her name. I.R.C. §408(d)(3)(C). If the surviving spouse is the sole beneficiary of the participant’s
IRA and has the unlimited right to withdraw amounts from that IRA, the spouse may elect to
treat the IRA as his or her own for minimum distribution purposes. This election may be made
at any time after the minimum distribution (if the participant was beyond his or her required
beginning date) for the calendar year of death has been made. Treas. Reg. §1.408-8, Q-5, A-5.
The election may be made by the surviving spouse redesignating the account into his or her
name, by missing a minimum distribution applicable to a surviving spouse beneficiary under the
regulations, or by making contributions to the account. It is interesting to note that the above
cited regulations pertaining to the election will not apply when a trust is the beneficiary of the
IRA, even if the surviving spouse is the sole beneficiary of the trust. A series of Private Letter
Rulings, issued prior to the regulations, permitted allocation of an IRA from a trust or estate to
the surviving spouse to facilitate a rollover because, in those rulings, the spouse had the
unilateral right to withdraw the IRA from the trust or estate. Recently issued Letter Rulings
confirm the rollover through an estate or trust in certain circumstances. See discussion later in
my outline. Further, the rollover may occur even though prior installments may have been paid
to the working spouse during his or her lifetime.
Copyright 2013, Gair B. Petrie - 8 -
Moreover, in Private Letter Ruling 95-24-020 (Mar. 21, 1995), a surviving spouse
in a non-community property state exercised her right to a “forced share” of the estate and
thereafter exercised her power to choose assets included in the forced share in order to allocate
the retirement benefit to herself. The ruling allowed her to roll over the account to an IRA in her
name.
Private Letter Ruling 200634065 contained a statement by the IRS broadly
interpreting the ability of the surviving spouse to complete a rollover through a trust or an estate.
In this case, the decedent’s IRA was payable to his estate. The decedent’s wife was the sole
beneficiary and personal representative of the estate. The wife’s plan was to have the custodian
distribute the IRA to the estate and from the estate to the spouse and, finally, from the spouse to
a rollover IRA within 60 days of the initial distribution. The IRS noted the distinction between
an inherited IRA (not eligible for a rollover) and the exception to the inherited IRA for payment
to a surviving spouse under IRC §408(d)(3)(C)(ii). The IRS then dealt with the statement in the
final §401(a)(9) regulations pertaining to the surviving spouse’s ability to elect to treat the
decedent’s IRA as his or her own. The IRS noted that this type of election is only available if the
surviving spouse is the sole beneficiary of the IRA with an unlimited right to make a withdrawal.
In addition, the IRS noted the statement in the regulations that the surviving spouse will not be
able to elect to treat the decedent’s IRA as his or her own if the beneficiary of the IRA is a trust
(even if the surviving spouse is the sole beneficiary of the trust). The IRS went on to
differentiate this language from the situation where the surviving spouse actually receives the
distributed IRA funds through an estate or trust and concluded as follows:
[A] surviving spouse who actually receives a distribution from an IRA is
permitted to roll that distribution over into his/her own IRA even if the spouse is
not the sole beneficiary of the deceased’s IRA as long as the rollover is
accomplished within the requisite 60-day period. A rollover may be
accomplished even if IRA assets pass through either a trust and/or an estate.
(Emphasis added.)
In LR 200915063, an IRA was payable to a revocable living trust where the decedent
died prior to his required beginning date. The surviving spouse was the sole trustee of the living
trust. The IRA custodian advised the surviving spouse to pay the IRA to a taxable trust account.
Less than sixty days later, the surviving spouse, in her capacity as trustee, requested that the
custodian reverse the distribution back to the decedent’s IRA. The custodian declined. In this
private letter ruling, the IRS permitted (i) allocation of the IRA distribution to the revocable
portion of the revocable living trust, (ii) extension of the rollover period under IRC §408(d)(3);
and (iii) rollover by the surviving spouse into an IRA in her name.
See the discussion of additional private letter rulings in this area at Section 1.3(2), below.
Interestingly, the IRS has issued more than sixty private letter rulings approving
“indirect rollovers” where an estate or living trust was the designated beneficiary of an IRA or
retirement plan and the surviving spouse as beneficiary or fiduciary had the power and
control to allocate the IRA or retirement plan to him or herself. Even though this concept has
been around for years, there may be a theory which does not require that the surviving spouse
actually have this type of control. Under IRC §402(c)(9) and 408(b)(4)(ii) a distribution
Copyright 2013, Gair B. Petrie - 9 -
received by an account holder which is rolled into an IRA or a qualified plan within sixty days
is a qualified rollover. IRC §402(c)(9) goes on to state that “if any distribution attributable to
an employee is paid to the spouse of the employee after the employee’s death, the preceding
provisions of this subsection shall apply to such distribution in the same manner as if the
spouse were the employee”. In other words, this statute seems to say that any amount of an
account attributable to a decedent spouse which is ultimately paid to the surviving spouse may
be rolled over by the surviving spouse even if the payment was initially made to an estate or a
trust. It should be noted that the IRS has picked up this rationale at least once in PLR
200703035. Also, this rationale appears in the preamble to the final regulations under IRC
1.401(a)(9) and 1.408-8.
(e) Nonspouse individual beneficiary
If the employee dies after the required beginning date and an individual who is
not the account holder’s spouse is the designated beneficiary, the maximum distribution period
will be the designated beneficiary’s life expectancy (determined with reference to the
beneficiary’s birthday in the calendar year following the calendar year of the account holder’s
death) and using the tables under Treas. Reg. §1.401(a)(9)-9, Q-1, A-1. The applicable
distribution period will be reduced by one for each calendar year elapsing after the calendar year
following the account holder’s death. Treas. Reg. §1.401(a)(9)-5, Q-5, A-5(c).
For example, assume the surviving spouse passes away naming the couple's only
child as beneficiary and that the child's attained age in the year following the surviving spouse's
death is 45. Under the single life table of Treas. Reg. 1.401(a)(9)-9, Q-1, A1, the divisor will
start at 38.8 to be reduced by one year for each calendar year elapsing after the calendar year
following the surviving spouse's death. This is known as a "stretch-out" IRA because the
minimum distributions are so small.
(f) Non-individual (or no) designated beneficiary
Under the regulations, only individuals and certain trusts may be designated
beneficiaries for the purposes of creating a distribution period. Treas. Reg. §1.401(a)(9)-4, Q-3,
A-3. This rule can cause problems when the participant’s estate is the beneficiary. If the
participant died before his or her required beginning date, the estate as beneficiary will trigger
application of the five-year rule, under which distribution must be complete by the calendar year
containing the fifth anniversary of the participant’s death. (Note: The 2009 calendar year does
not count due to the RMD Holiday of §408(a)(g)(H). This could extend the five year period
another year.) Treas. Reg. §1.401(a)(9)-3A(b), Q-2, A-2. If, by contrast, the participant died
after the required beginning date and the estate was the designated beneficiary, distribution may
be made over the remaining life expectancy of the account holder without recalculation. Treas.
Reg. §1.401(a)(9)-5, Q-5, A-5(c)(3). The above rules would also apply when a charity or a trust
that is not a “qualified trust” is designated beneficiary.
In Private Letter Ruling 2003-43-030 (July 31, 2003), the decedent (who died
after his required beginning date) died without designating a beneficiary of his IRA. Under the
IRA custodial account agreement, the decedent's estate was the beneficiary. The decedent's three
children were equal residual beneficiaries of the estate. A daughter asked the I.R.S. to approve
Copyright 2013, Gair B. Petrie - 10 -
the segregation of her one-third share of the IRA and a subsequent IRA-to-IRA transfer to a new
IRA custodian. The I.R.S. permitted the segregation and the IRA-to-IRA transfer; provided,
however, that this process did not result in a "stretch-out". Rather, the daughter was required to
take minimum distributions over the decedent father's remaining life expectancy. The same result
was reached in Private Letter Ruling 201128036.
See the discussion of LR200846028 under the “Reformation” heading under
Trusts as beneficiaries, below.
(g) Multiple beneficiaries
If, on the last day of the calendar year following the participant’s death, there are
several beneficiaries of the account and the account has not been separated as described below,
the beneficiary (as of September 30th of that year) with the shortest (or no) life expectancy will
be used to determine minimum distributions. Thus, if several children were beneficiaries of the
account, then, absent the separate account treatment, the life expectancy of the oldest child,
unrecalculated, would be used to determine distributions from the account. If a charity or estate
were one of several beneficiaries, absent corrective action (i.e., division into separate accounts
before the end of the calendar year following the calendar year of death), the account holder
could be deemed to have died without a designated beneficiary. Treas. Reg. §1.401(a)(9)-5, Q-7,
A-7.
As mentioned above, the rules that focus on the beneficiary with the shortest (or
no) life expectancy may be significantly mitigated in most events through timely compliance
with the separate account rule of Treas. Reg. §1.401(a)(9)-8, Q-2, A-2.
(h) Separate accounts/quasi-separate accounts
The regulations permit a single account to be divided into separate accounts, each
having different minimum distribution rules, as long as separate accounting, including allocating
investment gains and losses, is established. Treas. Reg. §1.401(a)(9)-8, Q-2, A-2(a). If there are
separate IRAs (or separate accounts as per the regulations), different minimum distribution rules
may apply with respect to each such account. The segregation must occur no later than the end of
the calendar year following the calendar year of death. Id.
Practice Tip: If after the participant’s required beginning date a spouse (or trust for a spouse)
who is more than ten years younger than the participant and other beneficiaries
will be named, the separate account for that beneficiary should be established
prior to the calendar year for which separate account treatment is sought.
The importance of separate IRAs (or accounts) cannot be overstated. From a
minimum distribution standpoint, each individual beneficiary will, after the participant’s death,
have a maximum deferral period equal to his or her own unrecalculated life expectancy.
Moreover, each beneficiary will have the right to use that deferral or take earlier distributions as
each he or she chooses. Each beneficiary will have the right to make his or her own investments.
Finally, each beneficiary could select his or her own custodian of the decedent's IRA, through an
IRA-to-IRA transfer. See Priv. Ltr. Rul. 2000-08-044 (Dec. 3, 1999). Note: The IRA account is
Copyright 2013, Gair B. Petrie - 11 -
still "owned" by the decedent, for the benefit of the beneficiary; only a spouse as beneficiary can
transfer the decedent's IRA to the spouse's own IRA.
The regulations make clear that the separate account treatment is not available to
beneficiaries of a trust. Treas. Reg. §1.401(a)(9)-4, Q-5, A-5(c). Thus, if a qualified trust is a
beneficiary and that trust divides into equal shares for the deceased account holder’s children, the
life expectancy of the oldest child will determine minimum distributions, even if the IRA is
segregated into separate IRAs for each separate trust fund. The planner could likely avoid this
rule by including, in the IRA beneficiary designation itself, a direction to divide the IRA into
separate and equal IRAs for each trust fund.
In Private Letter Rulings 2003-17-041 through 2003-17-044 (Dec. 19, 2002), the
I.R.S. took a very harsh approach with regard to separate share treatment for separate trust funds.
In those rulings, one trust was designated as beneficiary of the IRA. However, both the
beneficiary designation language and the trust language allowed for division into separate trusts
for each of the decedent's three children. Essentially, the I.R.S. stated in the ruling that because
the separate trusts and shares were not automatically established at death, separate share
treatment was not available and each trust's maximum distribution period would be measured
with respect to the oldest child. The IRS followed this approach in LRS 200634068, 200634069
and 200634070. The only way to avoid the result of this ruling would be to direct the trustee (in
the trust document) to establish the three separate trusts effective at death and , in the beneficiary
designation, set forth a required division of the IRA into separate IRAs for each of the trusts. In
other words, all fiduciary discretion should be taken out of the equation. Even if this occurs, it is
not clear from these rulings that separate share treatment would apply. The I.R.S. might still
argue that because the separate trusts were not technically in existence at death, separate share
treatment is not available.
It should be noted that an IRA beneficiary designation giving multiple
beneficiaries fractional interests in the account may take advantage of the separate account rules,
as most states require fractional gifts to receive a pro rata share of income, appreciation,
depreciation and the like. However, the practitioner should take care using pecuniary formulas
in an IRA beneficiary designation. If the practitioner wishes to set up separate account
treatment, the language of the IRA beneficiary designation must state that the pecuniary gift will
receive its share of appreciation, depreciation, income, and the like.
There is now a concept that practitioners are referring to as the "quasi-separate
account." This situation usually occurs when an estate or trust has been designated as
beneficiary and the fiduciary later directs the IRA custodian to divide the IRA into separate
accounts, each payable to a separate beneficiary or trust fund. If dealing with a trust in which
both the trust document and beneficiary designation require division of the IRA into separate
IRAs (one payable to each separate trust fund), true separate account status will be achieved,
because, assuming each separate trust adequately deals with the qualified trust rules and
contingent beneficiary issue, the beneficiary of each trust will be used for minimum distribution
purposes. If, however, the segregation into separate IRAs is at the direction of the trustee
(without a requirement in the beneficiary designation itself), then true separate account status is
not achieved. In such a case, the oldest trust beneficiary’s life expectancy will control minimum
distribution calculations for all of the trusts after segregation. Priv. Ltr. Ruls. 2003-17-041
Copyright 2013, Gair B. Petrie - 12 -
through 2003-17-044 (Dec. 19, 2002), 2004-10-020 (Dec. 9, 2003), & 2004-44-033 (Aug. 3,
2004) (trustee directed segregation of an IRA into separate IRAs; one for each individual
beneficiary of the trust.). When the estate is designated as beneficiary and the personal
representative directs division of the IRA into separate shares for each of the estate's
beneficiaries, the I.R.S. will approve the division, but true separate share status is not achieved.
Rather, minimum distributions will be calculated with reference to the decedent's remaining life
expectancy (if the decedent died after his required beginning date) or under the five-year rule.
The most recent example of this is PLR 201208039. The account holder died
after her required beginning date naming her estate as beneficiary of the IRA. The estate poured
over to a trust and the trust ultimately was to be distributed to four children. The four children
wanted to divide the IRA into four separate inherited IRAs; one for each child. The IRS
approved the division by IRA-to-IRA transfer and the creation of the four inherited IRAs on a
tax-free basis. However, because the estate was the designated beneficiary, the account holder is
treated as having died without a designated beneficiary meaning that each of the four inherited
IRAs must be distributed by calculating RMDs based on the account holder’s life expectancy.
(i) Trusts as beneficiary (multiple beneficiaries and the “conduit trust”)
The practitioner should be aware that successfully using a trust as a beneficiary of
a retirement plan or IRA is a tricky proposition. The qualified trust rules described above must
be complied with and the practitioner must take care to avoid any problems with multiple
beneficiaries as described above. Moreover, there is a true economic concern. A spousal trust
(i.e., credit shelter or QTIP trust) should be compared with naming the surviving spouse as
outright beneficiary. When the surviving spouse is outright beneficiary, both the participant and,
after rollover, the participant’s spouse will each independently be able to use the liberal Uniform
Lifetime Table. After both husband and wife have died, assuming separate accounts, each child
will have his or her own unrecalculated life expectancy for distributions. This method provides a
very long “stretch-out.” In contrast, when a trust is the designated beneficiary, the participant
will be able to use the Uniform Lifetime Table while living, but after his or her death, the life
expectancy of the spouse will be all that is available.
There are other income tax concerns as well. If the trust is a “simple trust” under
income tax rules (i.e., the trust is required to distribute all of its income at least annually), the
interplay between the minimum distribution rules and the required income distribution is
important. The trust will only be required to distribute fiduciary accounting income. If the
minimum distribution is greater than the fiduciary accounting income, the trust must treat the
entire minimum as income in respect of a decedent, hence distributable net income. However, if
the trust only distributes the fiduciary accounting income portion of the minimum distribution, it
may only deduct that distribution and the balance of the minimum distribution will be taxed at
the trust’s rates.
Another factor with trusts as beneficiaries is the new 3.8% tax on investment
income which applies to a trust with “modified adjusted gross income” above $11,500 for 2013.
The tax is imposed on interest, dividends and other passive investments. IRA and retirement
plan distributions retained by a trust are not investment income but could push the trust above the
threshold exposing all of its investment income to the tax.
Copyright 2013, Gair B. Petrie - 13 -
Qualified Trust Rules. Under the RMD rules, there are two key issues the planner
must contend with; (i) the “qualified trust rules” and (ii) properly drafting the trust so as to
segregate a trust beneficiary whose life expectancy will be used determine RMDs to the trust. If
a trust is the beneficiary, the underlying beneficiaries of the trust may be considered designated
beneficiaries if the qualified trust rules of Treas. Reg. §1.401(a)(9)-4, Q-5, A-5(b), and A-6 are
met on a timely basis. To be timely, compliance must occur as follows:
• Assuming distributions will be made with reference to the Uniform
Lifetime Table during the participant’s lifetime, the qualified trust rules do
not need to be complied with until October 31 of the calendar year
following the calendar year of the participant’s death. Treas. Reg.
§1.401(a)(9)-(4), Q-6, A-6(b).
• If the participant’s spouse is more than ten years younger than the
participant, and the participant wishes to name a trust as beneficiary yet
look through the trust to treat the spouse as beneficiary in order to use the
actual joint life expectancy of the participant and the spouse, the qualified
trust rules must be met, presumably before the due date of any minimum
distribution to be so calculated. Treas. Reg. §1.401(a)(9)-4, Q-6, A-6(b).
The qualified trust requirements are fairly straightforward:
• The trust is a valid trust under state law, or would be but for the fact that
there is no corpus.
• The trust is irrevocable or will, by its terms, become irrevocable upon the
death of the participant.
• The beneficiaries of the trust who could be treated as designated
beneficiaries under the rules discussed below, are identifiable from the
trust instrument.
• The documentation required by Treas. Reg. §1.401(a)(9)-4, Q-6, A-6(a) or
(b) has been provided to the plan administrator (or IRA custodian) on a
timely basis.
To meet the documentation requirement, the account holder (or after death, the
trustee) must provide a copy of the trust instrument and agree to provide any trust amendment
within a reasonable time in the future. In the alternative, the following may be provided: (i) a list
of the beneficiaries (including remainder beneficiaries and the conditions of their entitlement),
(ii) a certification that the list is complete and correct, (iii) an agreement that, if the trust is
amended, corrected information will be provided, and (iv) an agreement to provide a copy of the
trust instrument upon demand.
The problem is this: if an individual has a general power of appointment over the
portion of the trust estate containing retirement assets, it could be argued that the trust lacks
identifiable beneficiaries and so the trust would not qualify. For example, a general power of
appointment may be exercised in favor of an estate or a charity (neither of which has a life
Copyright 2013, Gair B. Petrie - 14 -
expectancy for I.R.C. §401(a)(9) purposes). A special power of appointment would likely not
cause a problem provided that, at the time of death, the individual within the class with the
shortest life expectancy is identifiable. Would the mere fact that a much older individual could
be adopted into the class create a problem? Of course, these issues may be avoided by including
a limitation that the power holder may only exercise the power in favor of individuals younger
than the power holder.
In Private Letter Rulings 2002-35-038 through 2002-35-041 (June 4, 2002),
separate trusts were set up for each child of the decedent. Each child had a testamentary general
power of appointment over the balance of his or her trust remaining at death. However, the trust
did not permit the child to appoint to a non-individual beneficiary or an individual who would
have a shorter life expectancy than the decedent's oldest child. This arrangement satisfied the
qualified trust rules. According to one commentator, the exclusion was added after the death of
the account holder by way of court reformation. Commentary No. 136, PLRs 200235838
through 200235041 – Minimum Distribution and Trusts, STEVE LEIMBERG'S EMPLOYEE BENEFIT
AND RETIREMENT PLANNING NEWSLETTER (Leimberg Info. Serv.), Sept, 23, 2002 (hereinafter
Commentary 136). Compare this Private Letter Ruling 201021038 (described below) wherein the
IRS refused to give effect to a trust reformation for RMD purposes.
Which Trust Beneficiary is the RMD Beneficiary? Satisfying the qualified trust
rules is really a threshold requirement. Once these rules are satisfied one “looks through” the
trust to its underlying beneficiaries in order to apply the RMD rules. Recall that the rules
applicable to multiple beneficiaries state that the beneficiary with the shortest (or no life
expectancy) will control to determine RMDs to all multiple beneficiaries (unless separate
accounts are established). Therefore, in the context of a trust as beneficiary, look through
treatment causes the beneficiaries of the trust to be multiple beneficiaries. Therefore, a key
question is which trust beneficiaries (i.e., current and remainder) will be considered in the group
or “basket” of multiple beneficiaries for this test. Sadly, the regulations are not clear on this
point:
A person will not be considered a beneficiary for purposes of determining who is
the beneficiary with the shortest life expectancy . . . or whether a person who is not an individual
is a beneficiary merely because the person could become the successor to the interest of one of
the employee’s beneficiaries after that beneficiary’s death. However, the preceding sentence
does not apply to a person who has any right (including a contingent right) to an employee’s
benefit beyond being a mere potential successor to the interest of one of the employee’s
beneficiaries upon the beneficiary’s death. (Emphasis added.)
Treas. Reg. §1.401(a)(9)-5, Q-7, A-7(c)(1).
As a result, the regulations create a key issue: Which of the current and
remainder beneficiaries will be the multiple beneficiaries so as to pluck out the beneficiary with
the shortest or no life expectancy to be used to determine RMDs to the trust?
Conduit Trust Safe Harbor. The key safe harbor approach is commonly known as
the “conduit trust” although that term is not used anywhere in IRC §401(a)(9) or the regulations.
Rather, the conduit trust appears as an example under Reg. 1.401(a)(9)-5, QA7(c)(3) (Ex.2).
Copyright 2013, Gair B. Petrie - 15 -
This example tells us that a trust beneficiary will be treated as the sole beneficiary for RMD
purposes (hence, his or her life expectancy will be used to determine RMDs to the trust) if during
the lifetime of said beneficiary, any and all distributions or withdrawals from the account are
required, by the terms of the trust, to be distributed to said beneficiary. In other words, the
trustee does not have the opportunity to accumulate any amounts withdrawn or distributed from
the IRA. Here are some tips concerning this valuable safe harbor:
The conduit trust permits the trustee to leave the IRA intact, investing and
reinvesting its assets. The RMDs from the IRA will be determined with reference
to the conduit beneficiary’s life expectancy as though the conduit beneficiary
were the sole individual beneficiary of the account. In other words, the only
required distributions from the account to the conduit beneficiary will be each
year’s RMD. Amounts in excess of the RMD may be withdrawn by the trustee
and distributed to the conduit beneficiary in accordance with the terms of the trust
(e.g., for health, maintenance, education, support).
Conduits trusts are an excellent choice with regard to trusts for minor children.
Although there is no authority on point, there is absolutely no reason why
distributions made by the trustee to a guardian of a minor child would not be
treated as made to that child for conduit trust purposes.
The conduit trust may also be used for a “pot trust” for minor children wherein
the trustee has the discretion to sprinkle distributions among the decedent’s minor
children. So long as the trust requires the trustee to distribute any and all
withdrawals from the IRA or retirement plan to any one or more of the children,
the life expectancy of the oldest child should govern for RMD purposes.
Although not expressly stated in the regulations, use of IRA funds to pay trustee
expenses should not disqualify the trust as a conduit trust. In LR 200620026, a
trust was deemed to be a conduit trust even though IRA funds were used to pay
asset management fees of the trustee.
Of course, a conduit trust is not a good option for a “special needs trust” for a
disabled beneficiary. This is because the required distributions would likely
disqualify the disabled beneficiary from needs based assistance.
The conduit trust approach is not a good option for a Q-Tip or credit shelter trust
for a surviving spouse. In a Q-Tip trust, if the surviving spouse lives long
enough, the RMDs will grow and the surviving spouse will receive outright
distributions of an increasing larger portion of the IRA, hence defeating the
purpose of the Q-Tip trust in the first place. In the case of a credit shelter trust, as
the surviving spouse ages and RMDs grow, assets will shift to the surviving
spouse, hence increasing his or her gross estate.
The identity of the remainder beneficiaries is irrelevant to a conduit trust.
Therefore, the conduit trust beneficiary may be given an unlimited general power
Copyright 2013, Gair B. Petrie - 16 -
of appointment over trust assets exercisable by Will. Or, remainder beneficiaries
could include charities or charitable trusts.
Immediate Outright Remainder Safe Harbor (Sort Of). In Treas. Reg.
1.401(a)(9)-5, Q-7, A-7(c)(3) (Ex. 1) the trust in question allowed principal to be distributed to a
surviving spouse based on a standard set forth in the trust instrument. Upon the surviving
spouse’s death, the trust would terminate and be distributed to the children of the account holder.
The regulation concludes that the beneficiaries of such trust for RMD purposes will be the
surviving spouse and the children. In other words, the regulation did not speculate as to who
would be default beneficiaries in the event none of the children survived the account holder’s
spouse. Instead, the regulation focused on who would take the trust assets outright immediately
following the death of the surviving spouse. This approach was also taken by the IRS in Rev.
Rul. 2006-26, discussed below. In addition, the Service has taken this position in private letter
rulings such as LR 200610027 and 200843042, discussed below.
This approach is a form of “accumulation trust” for RMD purposes as the trustee
can accumulate or distribute the IRA with distribution according to the standards in the trust.
This immediate outright remainder approach can be simple or complicated. For
example, a trust that provides for the account holder’s sister for life and remainder outright to the
account holder’s children would result in those of the account holder’s sister and children living
on the account holder’s death being treated as beneficiaries for RMD purposes. Presumably, the
sister would be the oldest as among them. Therefor, her life expectancy would be used to
determine RMDs to the trust.
Here is another example: Discretionary trust for the account holder’s child until
he reaches 45 years of age at which time the trust will be terminated; provided, that if the child
dies before reaching age 45, the trust will be distributed outright to the heirs at law of the child.
Assume that, on the date of the account holder’s death, the child survives the account holder and
that, should the child die immediately following the account holder, the child’s uncle would be
his oldest “heir at law”. In this case, the life expectancy of the uncle would be used to determine
RMDs to the trust.
The immediate outright remainder approach is likely the best alternative for a
special needs trust for a disabled beneficiary. As described above, a conduit trust is not a viable
alternative in this case. However, you could design the trust so that, following the account
holder’s death, special needs distributions only are permitted to the disabled child and, upon his
or her death, the trust assets are distributed immediately and outright to the disabled child’s
siblings. In this case, the child and his or her siblings living on the date of the account holder’s
death will be the RMD beneficiaries of the trust. The life expectancy of the oldest of such group
will be used to determine RMDs to the trust.
The immediate outright remainder approach must be used with caution because
there is always the possibility that one or more of the remainder beneficiaries may predecease the
account holder thereby changing the analysis of who is the oldest beneficiary. This issue may be
addressed through “fire wall language” described below.
Copyright 2013, Gair B. Petrie - 17 -
Finally, and as mentioned above, the immediate remainder approach allows the
trust to accumulate distributions from the IRA, so it really is a form of what is often referred to
as a “accumulation trust”. Thus, the planner should include proper firewall language described
below.
There are a couple of interesting private letter rulings dealing with the immediate
outright remainder approach:
In LR 200610027 an IRA was payable to a trust for the benefit of a minor
grandchild. Discretionary distributions were permitted until the grandchild
reached age 25 at which time the trust would terminate and be distributed to the
grandchild. If the grandchild died before reaching 25, the assets would pass to the
grandchild’s heirs at law. At the time of the account holder’s death, the oldest of
the grandchild’s heirs at law who would be entitled to the trust in the event the
grandchild died before reaching age 25 was the grandchild’s father. Therefore,
the Service concluded that the father’s life expectancy would be used to determine
RMDs to the trust. Of course, this result could have been avoided through a
conduit trust.
In LR 200843042 the decedent’s son was the beneficiary of a trust that would
continue until the son reached age 40. If the son were to die before reaching age
40, the trust was to be distributed to the son’s children; or if none, his heirs at law.
At the time of the account holder’s death, the son had no children. Moreover, the
oldest heir at law of the son’s was his mother and so her life expectancy was used
to determine RMDs to the trust. Once again, this result could have been avoided
through the use of a conduit trust.
Accumulation Trust. If the trust is not a “conduit trust” then, for the RMD
analysis, the trust is an “accumulation trust” as the trustee has the power to accumulate all or a
portion of distributions taken from the retirement plan or IRA. As described above, the
immediate outright remainder approach may, if properly structured, sufficiently zero in on the
trust beneficiary to be used for RMD purposes. However, the drafter should give consideration
to “firewall language” in any accumulation trust that, for example, (i) precludes the exercise of
powers of appointment relative to a retirement plan or IRA assets (or limits the appointees to
individuals no older than the other beneficiaries of the trust), (ii) prevents an adopted individual
from becoming a trust beneficiary relative to IRA or retirement plan assets when that adopted
individual might be older than the stated beneficiaries of the trust, and (iii) precludes the use of
IRA or retirement plan assets for the payment of estate and other expenses.
A tough question with accumulation trusts is whether the trustee may have the
ability to use IRA or retirement plan assets to pay the deceased account holder’s debts, expenses
and estate taxes (or similar expenses of the trust beneficiary). Of course, the fear is that such
power will cause the “estate” to be within the group or basket of beneficiaries; and, because the
estate has no life expectancy, the Five Year Rule would apply if the account holder died before
his required beginning date (or distribution would be made over the balance of the account
holder’s unrecalculated life expectancy if the account holder died after his required beginning
date). If one is drafting an accumulation trust, this should be easy enough to plan for assuming
Copyright 2013, Gair B. Petrie - 18 -
the accumulation trust will have other assets to pay these types of expenses. The planner can
simply state that the IRA/retirement plan assets will not participate in payment of these expenses.
What happens if this issue was not addressed in the planning stage (i.e., crops up after death):
As an initial matter, the IRS has never formally (or informally through a
private letter ruling), disqualified a trust based on its ability to pay these
expenses of the decedent’s estate.
There are multiple private letter rulings which take the position that, so
long as the IRA is protected from claims of creditors, the estate could not
be considered a beneficiary of the trust because the trustee could not be
forced by the personal representative to participate in payment of
expenses. See LRs 200209057, 2004440031 and 200750019.
In the estate administration process, the estate could be removed as a
potential beneficiary simply by having its participation in these types of
expenses completed or released by the September 30th
date.
PLRs 200432027, 029 and 031 did not disqualify a trust simply because
the retirement benefits remained subject to payment of estate taxes after
the September 30th
date.
Allocation to Subtrusts. What if the beneficiary of the account is a trust which, pursuant
to the terms of said trust is to be divided among subtrusts? Reg. 1.401(a)(9)-4QA5(d) tells us
that the qualified trust requirements as well as the basket of beneficiaries issue must be analyzed
with respect to each subtrust to which benefits may be allocated. What if the trust contains
language stating that it is the decedent’s intent that, to the extent possible, retirement benefits be
allocated to one particular subtrust over another? (LR 199903050 still required all possible
recipient trusts to be analyzed whereas LR 200620026 required only the favored trust to be so
analyzed.)
As described above, Reg. 1.401(a)(9)-4QA5(c) makes clear that separate account
treatment is not available for beneficiaries of a trust. This is an important rule for the planner to
pay attention to:
If the account is payable to a living trust and a living trust is ultimately distributed
outright to the decedent’s children, the analysis is as follows: First, the trust will need to
be a qualified trust. Second, the basket of beneficiaries will be the decedent’s children
(assuming no other beneficiaries of the revocable trust). Thus, at the conclusion of trust
administration, the trustee can direct the IRA custodian to create separate inherited IRAs
from the decedent’s IRA; one for each of the decedent’s children. However, RMDs for
each of these inherited IRAs will be determined with reference to the life expectancy of
the oldest child. (See LRs 200634068, 200750019).
Of course, this result could be avoided by naming the decedent’s children as outright
beneficiaries of the IRA, in which case, they could divide the IRA after death to obtain
Copyright 2013, Gair B. Petrie - 19 -
separate account treatment under which each of their respective life expectancies would
be used for their respective inherited IRAs.
What if the revocable living trust breaks into separate trusts for the decedent’s children
following the decedent’s death? As described above, if the revocable living trust is the
designated beneficiary, both the revocable living trust and each child’s subtrust must be
analyzed under the above trust rules for RMD purposes. However, because the revocable
living trust itself is named, even if the children are deemed to be the sole beneficiaries,
true separate account treatment will not be obtained. The trustee will be able to cause
creation of separate inherited IRAs; one for each subtrust. However, RMDs with respect
to each said IRA will be determined with reference to the life expectancy of the oldest
child of the decedent.
The way to create pure separate account treatment under the above scenario would be
more specificity in the beneficiary designation. If the beneficiary designation requires
the account be divided into separate accounts in accordance with the separate account
rules; one for each of the trusts under the revocable living trust, then RMDs from each
inherited IRA will be calculated with reference to the life expectancy of the child
beneficiary of the trust to which it is payable (assuming, with respect to each said trust,
the child is the RMD beneficiary under the rules described in this outline, above).
Remember, an estate is a bad beneficiary. For example, if the decedent names an estate
as beneficiary and the Will provides that the estate is to be divided into separate trusts for
the decedent’s children, the results would be as follows: The personal representative of
the estate could cause the custodian to divide the IRA into separate inherited IRAs; one
for each trust. However, RMDs for each trust will be calculated as though the estate is
the beneficiary (Five Year Rule if the account holder died before his or her required
beginning date; remaining unrecalculated life expectancy of the account holder if the
account holder died after such date).
A better result could be obtained as follows: The beneficiary designation would require
that the IRA be divided into separate accounts; each payable to the trust established for
the child under the decedent’s Will. Assuming each said trust complies with all the trust
rules described above, and that the accounts are divided as required for separate account
treatment, RMDs from each separate inherited IRA will be calculated with reference to
the child beneficiary of the trust.
What if the decedent wants there to be multiple trusts for each child (e.g., GSTT exempt/
GSTT non-exempt)? Here is how to plan for this scenario: The Will or revocable living
trust could pass the trust balance (or estate residue) to a single trust which will be divided
between the GSTT exempt and GSTT non-exempt portion. Thereafter, each child will
have a GSTT exempt and non-exempt trust. If this overall trust is named as beneficiary,
and the trust rules described above are complied with for the overall and each underlying
trust, the oldest child of the decedent will be treated as the RMD beneficiary for each and
every GSTT exempt and non-exempt trust so created. Although this may not be the
optimal result for RMD purposes, it does provide significant flexibility by adding the
Copyright 2013, Gair B. Petrie - 20 -
retirement benefits to the “pot” for division between a GSTT exempt and non-exempt
share.
• Reformation.
Three Private Letter Rulings (LRs 200616039, 200616040 and 200616041) involved a
fact pattern under which the husband had an IRA of which he had designated his wife as primary
beneficiary and his daughters as contingent beneficiaries. The husband rolled the IRA to a new
custodian and directed the custodian to complete the beneficiary designations as with the
previous IRA.
The husband died after his required beginning date and the wife died soon afterward.
Shortly thereafter, the wife’s estate disclaimed the wife’s interest as primary beneficiary of the
husband’s IRA.
Because the second IRA custodian had not followed the husband’s instructions, his
daughters were not named contingent beneficiaries. Therefore, after the disclaimer, the State
Court reformed the beneficiary designation to include the daughters as contingent beneficiaries.
The reformation was based, in part, on an affidavit from the second IRA custodian stating that
the husband’s instructions that the second IRA be set up exactly like the first IRA had not been
followed.
Thereafter, the IRA custodian created two new f/b/o IRAs; one for each daughter.
The IRA approved (i) the disclaimer, (ii) the establishment of the two f/b/o IRAs by way
of IRA-to-IRA transfer and (iii) each daughter’s ability to compute RMDs over the life
expectancy of the oldest daughter.
Of course, it is very beneficial that the IRS recognized the reformation of the beneficiary
designation.
However, there are a couple of observations about these Letter Rulings:
• These rulings may be incorrect with regard to the use of the oldest daughter’s life
expectancy for RMD purposes. The LR cites the language in the §401(a)(9) regulations
that states that a person’s disclaimer between the date of death and the September 30th
date, eliminates the disclaimant as an RMD beneficiary. What the reviewer may have
missed, however, is additional language in the regulations that states that a person who
dies after the account holder but before the September 30th
date without disclaiming,
continues to be treated as the beneficiary as of the September 30 date without regard to
the identity of the successor beneficiary. Reg. 1.401(a)(9)-4Q-4A-4(c). In other words,
the correct answer was that the separate accounts could be established, but RMDs would
be required over the deceased wife’s life expectancy.
• Another interesting point is as follows: Even if the IRS were correct with regard to its
conclusion that the disclaimer by the wife’s estate changed the beneficiaries to the
daughters, it was incorrect in the conclusion that the life expectancy of the oldest
Copyright 2013, Gair B. Petrie - 21 -
daughter should be used. It appears that separate IRAs were created so that use of each
daughter’s life expectancies would have been permitted.
PLR 200707158 was a nasty situation. The account holder had two cousins (Cousin A
and Cousin B). The account holder designated cousin A's three children as beneficiaries of an
IRA. After the account holder's death, separate fbo or inherited IRAs were set up for each of
Cousin A's children. Cousin B sued Cousin A and his children arguing undue influence. After
conducting discovery and proceeding towards trial, a settlement was reached and court approved.
A judgment reformed the IRA beneficiary designation effective the date before the account
holder's death so that Cousin B would be the beneficiary of the IRA. In the private letter ruling,
the IRS confirmed that (i) the settlement did not constitute a taxable gift by Cousin A's children
to Cousin B, (ii) the transfer of the three inherited IRAs of Cousin A's children to an inherited
IRA for Cousin B pursuant to the settlement agreement, was not taxable and (iii) Cousin B
would be taxed on distributions from his IRA in the future.
In PLR 200742026, the account holder maintained an IRA with a beneficiary designation
naming his wife as primary beneficiary and daughter as secondary beneficiary. On a subsequent
beneficiary designation, the account holder again named his wife as primary beneficiary but, in
spite of a reminder from the IRA custodian, neglected to complete the secondary beneficiary.
The account holder died before signing the new form. There were two other very bad facts:
(i) the account holder's spouse predeceased him and (ii) the custodial account agreement
provided that, absent a designated beneficiary, the estate became the beneficiary.
The account holder's daughter was the sole beneficiary of the account holder's estate. In
the process of the probate, the account holder's daughter obtained a court order amending
the IRA beneficiary designation to name the daughter as beneficiary of the IRA.
The IRS cited Reg. 1.401(a)(9)-4, QA-1 which states that:
A designated beneficiary is an individual designated as a beneficiary under
the terms of the IRA or by an affirmative election of the IRA owner.
Moreover, the fact that an IRA owner's interest passes to a certain
individual under a Will or under otherwise applicable state law, does not
make the individual a designated beneficiary . . .
The IRS concluded that, because there was no designated individual beneficiary under
the above rules and the account holder died after the required beginning date, the RMDs
will be computed with reference to the account holder's life expectancy. In other words,
the court reformation was ignored.
LR 200846028. The account holder of an IRA died before his required beginning date.
The account holder’s beneficiary designation stated that the beneficiary was: as stated in
Wills.
The account holder’s estate plan was designed around a revocable living trust. Thus, the
account holder had a pour-over Will.
Copyright 2013, Gair B. Petrie - 22 -
Under the revocable living trust, specific bequests of real estate were made to certain
beneficiaries and the balance of the trust was to be divided and distributed among eight
individuals.
The trustee pursued and received a state court order interpreting the beneficiary
designation as a designation of the eight individual beneficiaries of the revocable living
trust. In short, the court order had the effect of moving the beneficiaries of the revocable
living trust into the IRA beneficiary designation as though they were direct beneficiaries
under the IRA beneficiary designation.
Of course, the stakes of this private letter ruling were high. If the state court order was
recognized by the IRS, the eight beneficiaries could each have separate IRAs and take
RMDs over the life expectancy of the oldest such beneficiary. If, on the other hand, the
language of the beneficiary designation was interpreted to specify the estate as
beneficiary, the entire IRA must be distributed within five years of the date of the
decedent’s death.
The IRS relied heavily on Reg. 1.401(a)(9)-4QA1 which states as follows:
The fact that an account passes to individuals under a will or otherwise
under applicable state law does not make that individual a designated
beneficiary unless the individual is designated as a beneficiary under the
plan.
Relying on the above, the IRS said that the court order was meaningless for RMD
purposes. Therefore, the estate would be treated as beneficiary and the five-year rule
applies.
PLR 201021038. Bad news for estate planners – IRS refuses to recognize trust
reformation for RMD purposes. The key facts involved in this private letter ruling were
as follows: Husband was the IRA account holder. Wife had predeceased husband. At
wife’s death, a bypass trust was created for husband with wife’s assets. The bypass trust
provided that, upon husband’s death, the trust would be divided into two equal trusts; one
for each of the couple’s children (“children’s trusts”). The children’s trusts were lifetime
trusts under which the child/trustee could make distributions of income and principal
based on MESH and an independent trustee could make distributions to the child’s
descendants. Each child had a lifetime and testamentary special power of appointment
(“SPOA”) under which permissible distributes included charities. The children’s trusts
were not structured as conduit trusts. Nor was there any appropriate “firewall language”
necessary for accumulation trusts under the RMD rules.
However, there was an odd statement of intent under which the trustor clearly desired
“stretch out” treatment under which RMDs from the IRA to the trusts would be computed
over as long a period as permissible. The problem with this language, however, is that it
was not specific as to whose life expectancy should be used nor was the trustee given any
authority to amend the trust.
Copyright 2013, Gair B. Petrie - 23 -
Husband died with the bypass trust named as beneficiary of the IRA. He died after his
required beginning date. After the husband’s death, the trustees filed for and obtained a
retroactive court-ordered trust amendment which essentially did two things: First, the
children’s trusts were converted to “conduit trusts” under which IRA distributions to the
trusts could not be accumulated. Rather, any distributions from the IRA would have to
be distributed to the child/beneficiary. Second, “firewall” language was added so as to
(i) remove charities from the appointees under the SPOAs, (ii) prohibit use of IRA funds
to pay debts and administration expenses, etc., and (iii) prohibit distribution of IRA funds
to descendants older than the oldest child.
It is interesting to note that had either approach been taken prior to death, such approach
would have worked. In other words, the approach taken in the reformation was a bit of
“belt and suspenders”.
The IRS took a hard line. Citing case law authority for the proposition that a reformation
of a trust is not effective to change the tax consequences of a completed transaction, the
IRS refused to recognize the trust reformation. As a result, it concluded that, without the
reformation:
Amounts distributed from the IRA to the children’s trusts could be accumulated;
and,
To these accumulations, charitable organizations are clearly authorized as
possible beneficiaries.
As a result of the above, the IRS concluded that, for RMD purposes, there was no
designated beneficiary which would mean that the RMDs to the trusts must be distributed
over the period of the husband’s remaining life expectancy. This all points to a troubling
trend.
For a while, the IRS seemed relatively willing to allow post-mortem corrections to RMD
situations. In PLRs 200616039 through 41, the IRS approved a reformation which
actually designated a contingent beneficiary. More recently, however, the IRS refused to
recognize a contingent beneficiary created by reformation. PLR 200742026. In PLR
200846028, the IRS refused to recognize a reformation of somewhat ambiguous language
in a beneficiary designation and, instead, treated the decedent’s estate as beneficiary.
Previous private letter rulings have allowed trust reformations for RMD purposes. See
Commentary Number 136, PLRs 200235038 through 200235041 – minimum
distributions and trusts, Steve Leimberg’s employee benefit and retirement planning
newsletter, September 23, 2002. It now appears that, at least the rulings department is
taking a harder line with regard to reformations. This position may be at odds with the
September 30th
“shake out” date concept. If a beneficiary can be eliminated for RMD
purposes between death and the shake out date, why can’t a trust reformation occur
which effectively eliminates charities, decedent’s estates and beneficiaries over a certain
age?
Copyright 2013, Gair B. Petrie - 24 -
In light of this private letter ruling, the best advice to practitioners is as follows:
Take great care in drafting a trust that will be the beneficiary of an IRA or retirement plan
account. You must make certain that you qualify the trust as a “qualified trust” under the
regulations and incorporate either the conduit trust approach or appropriate firewall
language. (This is really nothing new, but due to the IRS’s antagonism towards post-
death reformations, it is even more important.)
If one of these scenarios lands in your lap post-death, you need to advise the client that
the conservative approach would be that the situation cannot be fixed through a post-
death reformation. However, bear in mind that a private letter ruling such as that
discussed above is not necessarily the outcome if the matter were to be litigated. A more
aggressive client might decide to reform the trust but not submit for a private letter ruling.
If this is the case, you need to advise such client of the 50% penalty under IRC §4974 for
failure to take the full RMD in any particular year.
But wait! (PLR 201203033) The decedent designated a marital trust as beneficiary of a
qualified retirement plan account. The decedent’s wife was the only beneficiary of the
trust during her lifetime and, thereafter, the trust is to split into two trusts; one for each of
the decedent’s children. As to one child’s trust, the child was given the power to appoint
to anyone other than himself, his estate or the creditors of either.
Prior to September 30 of the calendar year following the decedent’s death, the child
partially released his power of appointment (releasing the ability to appoint to any non-
individual or any individual older than the surviving spouse).
Here is what the IRS concluded:
The trust is a qualified trust.
The beneficiaries of the trust will not include individuals older than the surviving
spouse.
Because the trust is a qualified trust, the non-spouse rollover rules allow for the
creation of an inherited IRA to receive a direct distribution of the retirement plan
account. The inherited IRA will be f/b/o the marital trust.
RMDs from the inherited IRA will be computed with reference to the spouse’s
life expectancy.
Slayer Statute
PLR 201008049. In this case, the designated IRA beneficiary lost the right to his benefits
under a states slayer statute. Apparently, there was not a contingent beneficiary so the
court ordered that, pursuant to the decedent’s will, a “rightful beneficiary” was the taker.
Copyright 2013, Gair B. Petrie - 25 -
Even though the slayer statute treats the slayer as having predeceased the decedent, the
decedent did not actually predecease for RMD purposes, the slayer’s life expectancy will
be used for RMD purposes. However, the 50% penalty for failure of the rightful
beneficiary to take RMDs (as she did not control the IRA through the course of the
estate’s litigation) and the negligence penalty were waived as well.
(j) Beneficiary’s right to name a beneficiary/transfer account
Assume that both husband and wife have died and a child is the beneficiary of a
“stretch-out” IRA. As discussed above, minimum distributions will be computed with reference
to the child’s life expectancy. If the plan or IRA document so provides, the beneficiary may
designate who will receive the undistributed account following the beneficiary’s death. The
recipient would be subject to the same minimum distribution rules as the deceased beneficiary.
Treas. Reg. §1.401(a)(9)-5, Q-7, A-7(c)(2).
Moreover, even though the surviving spouse is the only beneficiary who may roll
over an IRA (and therefore restart the minimum distribution rules), a nonspouse individual
beneficiary may transfer the decedent’s IRA from one custodian to another in a direct IRA-to-
IRA transfer as long as the account remains in the decedent’s name “f/b/o” the beneficiary, and
the minimum distribution rules applicable to that account do not change. See Priv. Ltr. Rul.
2000-2408-044 (Dec. 3, 1999). As well, a formally unsegregated IRA may be segregated by the
beneficiaries, and custodian-to-custodian transfers may thereafter occur with respect to the
segregated IRAs. Id. The ability to transfer from one IRA custodian to another can be quite
valuable. If one institution will not work efficiently with the family (i.e., permitting a
beneficiary to designate a death beneficiary, etc.), the account may be moved in a trustee-to-
trustee transfer. It is interesting that there is no code section permitting the trustee-to-trustee
transfer, for this power comes solely from the regulations. Treas. Reg. 1.408-8, A-8. Again, the
key to the trustee-to-trustee transfer is that the funds may not be distributed to the IRA
beneficiary.
In Private Letter Ruling 2003-43-030 (July 31, 2003), the decedent (who died
after his required beginning date) died without designating a beneficiary of his IRA. Under the
IRA custodial account agreement, the decedent's estate was the beneficiary. The decedent's three
children were equal residual beneficiaries of the estate. A daughter asked the I.R.S. to approve
the segregation of her one-third share of the IRA and a subsequent IRA-to-IRA transfer to a new
IRA custodian. The I.R.S. permitted the segregation and the IRA-to-IRA transfer, provided,
however, that this process did not result in a “stretch-out.” Rather, the daughter was required to
take minimum distributions over the decedent father's remaining life expectancy.
In another ruling, a son was named as beneficiary of his deceased mother’s IRA.
Mistakenly, following his mother’s death, the IRA was distributed to the son and a Form 1099-R
(Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance
Contracts, etc.) was issued to the son. Immediately the son transferred the funds to an IRA at
another financial institution in the name of the mother, deceased account holder for the benefit of
the son. The I.R.S. ruled that even though the financial institutions involved later agreed to treat
the entire transaction as an IRA-to-IRA transfer, the son would be taxed on the IRA. Priv. Ltr.
Copyright 2013, Gair B. Petrie - 26 -
Rul. 2002-28-023 (Apr. 15, 2002). This error stresses the importance of a nonspouse beneficiary
never touching IRA funds when the IRA is moved from one institution to another.
In yet another ruling, a taxpayer instructed the administrators of his retirement
plan to liquidate his account and directly transfer the proceeds to an IRA in the taxpayer’s name.
All of the paperwork necessary to complete this transaction was submitted to the Plan
Administrator. Before liquidation of the assets and the transfer could occur, however, the
taxpayer died. The taxpayer’s nonspouse beneficiaries requested a ruling that would permit the
direct rollover to occur because all the paperwork had been concluded before the taxpayer’s
death. The I.R.S. ruled that the rollover could not occur. In short, the Service concluded that for
the rollover to be valid, all of the steps, including the actual transfer of assets, would have to
have taken place while the taxpayer is alive. Priv. Ltr. Rul. 2002-04-038 (Oct. 30, 2001).
In one case, the account holder of an IRA removed the funds from his IRA and
transferred them into a nonqualified annuity through American Express Life Insurance
Company. Of course, the following year he received an I.R.S. Form 1099-R reporting the
amount as income. The taxpayer did not report the income on his return. After the I.R.S.
contacted the taxpayer, the financial institution prepared a corrected Form 1099-R and moved the
annuity funds into a qualified IRA annuity. The Tax Court had no sympathy for the taxpayer and
held that the corrective action was not sufficient, thus requiring the taxpayer to include the
amount in his income in the year of withdrawal. Crow v. Comm’r, 84 T.C.M. (CCH) 91 (2002).
Note that the above disallowed IRA rollovers (except possibly the Crow case)
would not likely be treated more favorably by a "kinder and gentler" I.R.S., which now has the
authority to grant "waivers" for failure to meet the 60-day deadline for reasons of "hardship," as
described in Revenue Procedure 2003-16, 2003-1 C.B. 359. E.g., Priv. Ltr. Rul. 2004-07-023
(Nov. 7, 2003); Priv. Ltr. Rul. 2004-07-025 (Nov. 17, 2003); Priv. Ltr. Rul. 2004-04-056 (Oct.
27, 2003). The "waiver" rulings deal with fact patterns where the recipient could make the
rollover, but did not do so correctly or in a timely manner. Nonspouse death beneficiaries cannot
do a rollover in the first place.
(k) Non-Spouse “Rollover”
Prior to the Pension Protection Act of 2006, a surviving spouse beneficiary of a
qualified retirement plan could roll the decedent’s account into an IRA in the surviving spouse’s
name. However, only the surviving spouse was permitted this opportunity. The new law permits
a “rollover” by non-spouse beneficiary of a retirement plan account to an “f/b/o IRA.” The f/b/o
IRA will then be subject to the RMD rules applicable to non-spouse beneficiaries. If a trust is the
beneficiary of the retirement plan, the trust may complete such a rollover. The trust must be a
“Qualified Trust” under the §401(a)(9) regulations to do so.
Under IRC §402(f)(2)(A), beginning in 2010, retirement plans are required to
offer the non-spouse rollover.
• The IRS issued Notice 2007-7 to provide some additional detail concerning non-spouse
rollovers. According to the Notice:
Copyright 2013, Gair B. Petrie - 27 -
• The retirement plan does not have to offer the non-spouse rollover option. This is
surprising (and perhaps wrong) in light of the wording of the new statute. IRC
§402(c)(11)(A) which was amended by the 2008 Pension Act requires tax-
qualified retirement plans to offer the non-spouse rollover for plan years
beginning after December 31, 2009. Until then, offering the non-spouse rollover
is up to the sponsoring employer.
• The recipient IRA must be established in a manner that identifies the deceased
individual and the beneficiary (i.e., "Tom Smith as beneficiary of John Smith").
• If a trust is the beneficiary and wishes to complete the non-spouse rollover, the
Notice states that said trust must meet the requirements of a qualified trust of
1.401(a)(9)-4Q&A-5.
• Unfortunately, the Notice takes the position that the RMD rules applicable to the
non-spouse beneficiary under the retirement plan will likewise apply with regard
to the IRA. This will not make a difference if the decedent dies after his or her
RBD (note, however, that many plans postpone the RBD to actual retirement for
employees who are not 5% owners).
If the decedent dies before the RBD, and the terms of the plan have elected the
five-year RMD rule, according to the Notice, the beneficiary cannot get out of the
five-year rule by completing the non-spouse rollover. For example, the plan
might state that, following death, the beneficiary must take a lump sum
distribution sometime before the end of the fifth calendar year following death.
This would be viewed as an election of the five-year rule by the plan which
apparently could not be changed by the non-spouse rollover.
In IRS employee plan news issued on February 13, 2007, there was a softening
of the foregoing point. If, under the plan, the five-year rule applies for
determining RMDs because the account holder died before his or her required
beginning date and the plan in question has elected the five-year rule, the non-
spouse beneficiary may escape the five-year rule if (i) the plan allows the non-
spouse rollover and (ii) the rollover is completed before the end of the calendar
year following the calendar year of the participant's death.
In PLR 200717022, the IRS stated that, for the non-spouse rollover rules to apply,
a plan need only be amended in time to permit the rollover. In other words, having the language
in the plan at the time of the account holder's death should not be required.
See PLR 201203033 for a non-spouse rollover to an Inherited IRA for a trust.
(i) Excess distributions
If amounts are distributed in any calendar year in excess of the minimum required
distribution, no credit will be given in subsequent years for that distribution. Treas. Reg.
§1.401(a)(9)-5, Q-2, A-2. However, when a distribution is actually made to the participant during
Copyright 2013, Gair B. Petrie - 28 -
the first distribution calendar year (rather than on the succeeding April 1), amounts so distributed
will be credited toward the required distribution to be made on or before the participant’s
required beginning date.
(m) Penalties for failure to meet MDIB
There are penalties for failing to meet the minimum required distribution under
both the minimum distribution incidental benefit (MDIB) and the minimum distribution rules.
The 1986 Act amended §4974 to impose on the payee, effective in 1989, a 50 percent tax on the
amount by which the retirement plan fails to satisfy the minimum distribution rule or the MDIB.
The penalty may be waived if the shortfall was due to reasonable error. Treas. Reg. §54.4974-2,
Q-7, A-7.
Under prior instructions to IRS Form 5329, the 50% penalty of IRC §4974(a) for
failure to timely withdraw an RMD could be waived for reasonable cause (defined in the
regulations), but only if the failure was reported on IRS Form 5329 and accompanied by
payment of the penalty amount. In other words, the IRS got the money first and the reasonable
cause waiver was really in the form of a request for a refund. Under the revised instructions
issued for the 2007 5329, a waiver request may be made on Form 5329 without payment of the
penalty amount.
(n) Liquidity planning
From the tax and investment perspectives, it is generally desirable to take full
advantage of the I.R.C. §401(a)(9) rules in order to maximize the income-tax-deferred growth of
the account. A prudent plan gives the working spouse, nonworking spouse, and the couple’s
children the flexibility to take minimum distributions over the maximum time period allowed
under I.R.C. §401(a)(9). The rules of §401(a)(9), however, allow income, but not estate tax,
deferral. With proper planning, described below, the estate tax marital deduction will be
allowable with respect to the account. Thus, no estate tax will be due on an account until the
death of the surviving spouse.
Upon the death of the surviving spouse, the rules of I.R.C. §401(a)(9) may allow
the beneficiaries to defer distributions for a significant additional period. However, the
beneficiaries may be required to withdraw a substantial portion of the account if there is no other
source of funds available to pay the estate taxes. Withdrawals are, of course, subject to the
imposition of income taxes. Accordingly, clients often wish to provide another source of liquid
assets with which to pay estate taxes on the death of the surviving spouse. A common source is
an irrevocable life insurance trust that holds second-to-die policies of insurance on the lives of
the spouses.
(2) Income in respect of a decedent (IRD)
Both the right to a lump sum distribution and the right to an installment or annuity payout
are treated as income in respect of a decedent (IRD) under I.R.C. § 691. M. Carr Ferguson et al.,
FED. INCOME TAX’N OF ESTATES, TRUSTS AND BENEFICIARIES (3d ed. 1998 & Supp. 2005). As a
general rule, IRD is taxed to the recipient in the year of receipt. I.R.C. §691(a)(1). However, the
imposition of the income tax is accelerated if an IRD item is transferred within the meaning of
Copyright 2013, Gair B. Petrie - 29 -
I.R.C. §691(a)(2). The rule constitutes a serious trap that the planner must take into account. The
transfer of an item of IRD in satisfaction of a pecuniary bequest, including a formula marital
deduction bequest, may subject the item to the income tax.
A recipient who includes a retirement PLAN distribution in gross income is allowed an
income tax deduction to the extent the distribution gave rise to an estate tax. I.R.C. §691(c).
However, if the death distribution is a lump sum distribution, the deduction reduces the amount
subject to special income tax averaging. I.R.C. §691(c)(5).
(3) Early distribution penalty, I.R.C. §72(t)
Distributions made before the working spouse attains the age of 59 1/2 are generally
subject to a 10 percent penalty under I.R.C. §72(t). However, distributions made to the
participant’s death beneficiary are not subject to the penalty. I.R.C. §72(t)(2)(A)(ii). This is true
even if distributions are made to the beneficiary in installments from the deceased participant’s
account. Priv. Ltr. Rul. 90-04 -042 (Nov. 6, 1989). This is also true even when the surviving
spouse transfers the deceased’s interest to an IRA in the deceased’s name and commences
distributions as beneficiary (rather than owner) of the IRA. Priv. Ltr. Rul. 94-18-034 (Feb. 10,
1994). In Private Letter Ruling 2001-10-033 (Dec. 13, 2000), the I.R.S. permitted a surviving
spouse to roll over the decedent’s IRA more than two years after the decedent’s death and after
the surviving spouse had taken distributions from the decedent’s IRA under the exemption from
the 10 percent penalty. See also Charlotte and Charles T. Gee, 127 T.C. 2006. However, if a
surviving spouse under 59 1/2 years of age is the death beneficiary and rolls the funds into an
IRA in his or her name, subsequent distributions from the IRA are subject to the 10 percent
penalty tax. Sears v. Comm’r, 100 T.C.M. (CCH) 6 (T.C. 2010).
The 10% penalty may be avoided, however, with proper planning under the equal
payment exception of I.R.C. §72(t)(2)(A)(iv). Under that provision the penalty tax does not
apply to a distribution that is made as part of a series of substantially equal periodic distributions,
made annually or more frequently, for the life or the life expectancy of the participant or for the
joint lives or joint life expectancies of the participant and his or her designated beneficiary. What
constitutes a series of substantially equal periodic payments is defined in I.R.S. Notice 89-25,
1989-1 C.B. 662.(4) Roth IRAs/§401(k) Accounts
A detailed discussion of Roth Accounts is beyond the scope of this chapter. However,
Roth Accounts differ greatly from regular IRAs and §401(k) Accounts in three key respects: (1)
contributions to Roth Accounts are made on an after-tax basis; (2) qualified distributions from
Roth Accounts are income tax-free; and (3) no minimum distributions from a Roth IRA are
required during the joint lifetime of the account holder and the account holder’s spouse, if the
surviving spouse effectuates a rollover, so that minimum distributions only begin after the death
of the Roth IRA account holder and spouse. I.R.C. §408A(a); I.R.C. §408A(e); I.R.C.
§408(A)(d)(3)(E)(ii). In sum, an individual can, within the Roth IRA rules of §408A and Roth
§401(k) rules, establish a Roth Account with after-tax contributions, allow those contributions to
grow on an income-tax-free basis, defer distributions until the death of the individual and his or
her spouse and, when minimum distributions commence to the couple’s children, they will be
income tax free so that the growth on the Roth Account is never subject to income tax.
Copyright 2013, Gair B. Petrie - 30 -
A key element of Roth planning is the ability to convert a regular IRA to a Roth IRA.
Under the Roth IRA rules, an individual with a regular IRA who meets the income limitation
described below may cause all or any portion of the IRA to be distributed from the regular IRA
and thereafter contributed to a Roth IRA. There is no limit on the amount that may be so
converted. The conversion, of course, triggers income tax on the regular IRA distribution. Roth
IRA conversions are not subject to the 10 percent penalty of I.R.C. §72(t). I.R.C.
§408A(d)(3)(A)(ii). However, as a condition for escaping the 10 percent penalty, the taxpayer
may not take distributions from the Roth IRA for a period of five years. I.R.C. §408A(d)(3)(F).
The most attractive element of a Roth conversion is the fact that the legislation allows the
income tax resulting from a conversion to be paid with funds other than the converted IRA. In a
sense, through the Roth IRA conversion process, Congress is allowing the taxpayer to contribute
to the Roth IRA the income tax liability associated with the regular IRA. Stated another way, the
entire converted IRA, as opposed to the converted IRA net of income tax, is allowed to pick up
the Roth IRA benefits (e.g., no minimum distributions and no income tax on distributions). For
this reason alone, individuals with significant wealth inside and outside a regular IRA and who
have the ability to keep their adjusted gross income within the required conversion limits should
consider a Roth conversion.
The Roth conversion may be an excellent planning tool in many circumstances. In the
case of an individual who has significant wealth both inside and outside the IRA and who has not
yet reached his required beginning date, a Roth conversion may be attractive. By capturing the
income tax liability on the IRA at an early date, deferring minimum distributions until the death
of the second spouse, and allowing all tax-free buildup to escape income taxation altogether in
the hands of the children, the conversion may create the greatest economic benefit to the family.
Under rules pertaining to §401(k) plans, if the §401(k) plan so permits, the participant
may designate that all or any portion of his or her §401(k) salary reduction contribution be
treated as a Roth contribution. A Roth §401(k) account is treated the same as a Roth IRA with
the exception that RMDs are required during the account holder’s lifetime. Of course, the RMDs
could be escaped by taking a distribution from the Roth §401(k) and rolling it into a Roth IRA.
Moreover, under the Pension Protection Act of 2006, an individual may complete a Roth
conversion by directing a rollover from a regular qualified retirement plan account (including a
§401(k), §403(b) or §457(f) plan) directly into a Roth IRA.
Under the Tax Reform Act of 2012, if a §401(k) plan permits, a participant may elect to
convert a regular §401(k) plan account to a Roth §401(k) account (paying the income tax in the
process).
Moreover, a non-spouse beneficiary of a qualified retirement plan may complete a non-
spouse rollover to a Roth IRA (paying the income tax in the process).
Under current law, an inherited IRA may not be converted to a Roth IRA, although this
will likely be changed.
As mentioned above, effective in 2010, the rules for converting a regular IRA to a Roth
IRA have been liberalized. Under current law, a regular IRA can be converted to a Roth IRA or
Copyright 2013, Gair B. Petrie - 31 -
a non-spouse beneficiary of a retirement plan may roll into a Roth IRA. The conversion of an
IRA (or non-spouse rollover) will trigger income in the year of conversion in the amount of the
converted account. Prior to 2010, taxpayers with adjusted gross income in excess of $100,000
could not make a Roth conversion or non-spouse rollover. Effective in 2010, the income ceiling
is repealed. Moreover, for IRA conversions occurring in 2010, the income caused by the
conversion will be taxed one-half in 2011 and one-half in 2012 (or, at the taxpayer’s election, be
included as 2010 income). If the taxpayer is under 59½ years of age, the income from the
conversion will not be subject to the 10% penalty of IRC §72(t), so long as the tax on conversion
is paid with funds outside the IRA and no distributions are taken for five years. Post-conversion,
only “qualified distributions” may be taken from the Roth account on a tax favored basis.
Qualified distributions are those made after the taxpayer is 59½, distributions made to a death
beneficiary, distributions attributable to the taxpayer’s disability or distributions that qualify for
certain special purposes (e.g., first time home buyer). IRC §408A(d)(2)(A). However, any
distributions within five years of a contribution to a Roth IRA or conversion of a Roth IRA will
not be qualified distributions. See 408A(d)(2)(B) for the calculations of this five (5) year period.
Amazingly, the Roth IRA rules do not create an exception to this five-year rule in the case of
death. A non-qualified distribution is one that either fails to satisfy the five-year rule or the
triggering event requirement. If non-qualified distributions are made, there is no tax until the
total amount initially contributed by the taxpayer has been returned to the taxpayer. However,
under §408A(d)(3)(F) there may be a 10% penalty on amounts withdrawn within five (5) years
of a conversion by a taxpayer who is under 59½.
A taxpayer who converts a regular to a Roth IRA may later change his mind and “undo”
the conversion. If the taxpayer changes his mind about the conversion (i.e., the value of the IRA
declines post-conversion), generally, the deadline for a Roth IRA conversion to be
recharacterized to a regular IRA is the due date, including extension of the taxpayer’s 1040 (or,
October 15 of the year following the conversion). The law does not permit “cherry picking”
recharacterization within a single IRA. Thus, a smart Roth strategy is to segregate different
investments into different traditional IRAs by way of IRA-to-IRA transfers before the conversion
occurs. Thereafter, each separate IRA holding separate types of investment funds or investments
will be converted. Under current law, each separate IRA may be left converted or
recharacterized on a “pick and choose” basis by the October 15th
deadline giving the taxpayer
significant flexibility. Remember, if a taxpayer is over 70½ and beyond his/her required
beginning date, the RMD for the calendar year in question may not be converted to a Roth IRA.
Rather, it must be distributed before the conversion.
Of course, the decision to convert a regular IRA to a Roth IRA is tricky. Of course, the
longer the Roth account remains undisturbed, the more likely there will be a benefit to the
conversion. Therefore, conversions while husband and wife are both alive and with a joint life
expectancy of at least 15 years, can make a lot of sense; provided they will not have a need for
the funds. Conversion in years where a taxpayer will be in a low income tax bracket or has
business or other ordinary losses also makes sense, so long as there is no near term need for the
funds. Conversion should also be considered in years where a taxpayer might make large
charitable contributions. One might even consider conversion close to death if the converted
IRA will be left to a generation-skipping trust for grandchildren which is a “qualified trust”. By
doing this, the income tax will be removed from the estate and, if the trust is properly structured,
RMDs from the account will be measured based on the grandchild’s life expectancy.
Copyright 2013, Gair B. Petrie - 32 -
Effective in 2013 there is a 3.8% “surtax” on net investment income (capital gains,
dividends, interest, annuity payments, royalties). This tax is triggered when an individual, estate
or trust’s “MAGI” (modified adjusted gross income) is over a certain threshold. The threshold is
currently $250,000 for married couples, $11,500 for estates and trusts. The tax is imposed on the
lesser of the investment income or MAGI over the threshold. IRA and retirement plan
distributions are not investment income; however, they do go into the calculation of MAGI. An
individual with high investment income may wish to consider a Roth conversion so as to front
load all of the MAGI associated with the IRA into one year.
There is a misconception that estate planning with Roth IRAs is easier than with regular
IRAs. These guidelines should be considered:
Of course, Roth accounts should be left to a surviving spouse so as to permit the rollover
and avoid any lifetime RMDs.
Roth accounts left to a credit shelter trust or a Q-Tip trust are a bit of a waste as the tax-
free growth will be shut down fairly rapidly (i.e., based on the life expectancy of the
surviving spouse). In short, no stretch out will be available under this scenario.
As with traditional IRAs, it should be possible with proper planning, to use a non-pro rata
division of the community property to have the Roth pass to the surviving spouse in
exchange for other assets passing to a credit shelter trust.
Roth accounts left to children will be subject to the same RMD rules as regular IRAs.
That is, smart planning suggests creation of separate accounts post-death and stretch out
RMDs keyed to each beneficiary’s life expectancy under Treasury regulations.
Trusts which are beneficiaries of Roth accounts need to be structured as “conduit trusts”
or accumulation trusts with appropriate firewall language so that RMDs will be computed
with reference to the trust beneficiary’s life expectancy. In other words, all of the RMD
complexities of trusts as IRA beneficiaries apply to Roth IRAs in the same way as regular
IRAs. Remember, even though qualified distributions to a trust from a Roth IRA will not
be income for tax purposes, a portion will be income for fiduciary accounting purposes.
An estate should not be the designated beneficiary of a Roth account. This is because the
post-death RMDs will be calculated with reference to the deceased account holder’s
remaining life expectancy.
Unlike traditional IRAs, Roths should not be left to charity because the income tax has
already been paid.
§13.3 ESTATE TAX
On the death of the working spouse, his or her community property interest in the account
is includible in his or her gross estate under I.R.C. §2039. However, if his or her interest passes
to the surviving spouse, it may qualify for a marital deduction under I.R.C. §2056. The key
planning question is how the included amounts will be coordinated with the client’s estate plan.
Copyright 2013, Gair B. Petrie - 33 -
Generally, the surviving spouse will roll over the account to an IRA. This will defer the estate
taxes on the funds until the surviving spouse’s death.
Under the Tax Reform Act of 2012, the $5 million gift, estate and generation skipping
tax exemptions were made permanent. So was the ability to transfer the deceased spouse’s
unused estate tax exemption (“DSUE”).
The high death tax credit means it is more likely that high net worth clients wishing to
fully fund the credit shelter trust of the first spouse to die may need to involve their
retirement plans or IRAs.
To preserve flexibility, it is likely that planners will rely heavily on disclaimers.
Under IRC §2010(c)(2) the DSUE of the first spouse to die may be transferred to the
surviving spouse for use in his or her estate provided that an election is made in the estate
of the first spouse to die. The election requires timely filing of a federal estate tax return.
This provision might be helpful for couples with large retirement accounts as the account
could pass to the surviving spouse (instead of a credit shelter trust) without loss of the
federal death tax exemption of the first spouse to die. Of course, this is not available for
Washington state estate tax purposes.
Over the years, practitioners have questioned the inclusion of IRAs and retirement plan
benefits in estate plans without some discount or adjustment for the income tax associated with
those accounts on distribution following death. In Tech. Adv. Mem. 2002-47-002 (July 16,
2002), the I.R.S. explicitly rejected any such discount, even if the estate needed withdrawals to
meet cash needs. Tech. Adv. Mem. 2004-44-021 (June 21, 2004). See also Smith v. United
States, 391 F.3d 621 (5th Cir. 2004) and Estate of Davis Kahn, (2005) 125 T.C. No. 11..
If the nonworking spouse is not a citizen of the United States, it is very difficult to obtain
the income tax benefits of the rollover and the estate tax benefits of the estate tax marital
deduction. First, the surviving spouse must be the beneficiary of an account to be able to roll it
over into an IRA in her name. Second, to qualify for the marital deduction the arrangement must
meet the requirements of I.R.C. §2056A. In Private Letter Ruling 96-23-063 (Mar. 13, 1996), the
surviving spouse, who was not a U.S. citizen, rolled over the decedent’s account to an IRA in her
name and entered into an agreement with the IRA custodian to comply with the I.R.C. §2056A
qualified domestic trust rules. The I.R.S. allowed the marital deduction. The qualified domestic
trust (QDT) regulations contain specific rules concerning qualification of an IRA or retirement
plan for QDT treatment. E.g., Treas. Reg. 20.20 26A-4(b)(7)(iii).
(1) Disclaimer
Estate plans are often designed so that a qualified disclaimer under I.R.C. §2518 may be
used to modify a plan after the death of the transferor. For example, a client may wish to allow
flexibility as to how much and exactly what assets will be used to fund a credit shelter trust. A
client who wishes to leave this decision to his or her surviving spouse can leave everything
outright to the surviving spouse and provide that any property that the surviving spouse disclaims
will pass to a credit shelter trust. However, note that the surviving spouse can only disclaim the
Copyright 2013, Gair B. Petrie - 34 -
working spouse’s share of an account — the surviving spouse cannot disclaim his or her own
interest in it. The regulations specifically address the impact of disclaimer. Treas. Reg.
§1.401(a)(9)-4, Q-4, A-4(a) permits a change of beneficiary for minimum distribution purposes
by reason of disclaimer.
Note that if the surviving spouse disclaims in favor of one or more of the couple’s
children, the minimum distributions will be driven by the beneficiaries resulting from the
disclaimer. If the entire account is disclaimed in favor of the children, then the children are the
only designated beneficiaries. If, by December 31 of the calendar year following death, the
account is divided as per Treas. Reg. §1.401(a)(9)-8, Q-2, A-2(a), the children will each have
their own life expectancy to compute minimum distribution. The account could be so divided by
the December 31 date to facilitate separate distribution periods and the spouse could rollover his
or her portion of the account.
Qualified disclaimers of retirement plan benefits and IRAs require careful predeath
planning. In the context of an IRA, the practitioner should review the custodial account
agreement itself to make sure a disclaimer will be recognized. Retirement plans involve issues of
plan language as well as spousal rights under ERISA. The beneficiary designation should
contemplate disclaimer or death of the surviving spouse. Thus, for example, the primary
beneficiary could be the spouse, with the instruction that any portion disclaimed by the spouse
would pass to the credit shelter trust, and the secondary beneficiary (to take in the event the
spouse is deceased) would be the couple’s children.
A question of key concern with respect to postmortem estate planning has been the
interplay between the required minimum distribution (RMD) of a deceased account holder who
had lived beyond his or her required beginning date and the concept of “acceptance” under the
disclaimer regulations. For example, assume a widow, age 75, named her child as primary
beneficiary of an IRA with a trust for a grandchild named as secondary beneficiary. Also assume
that, in the calendar year of death, the widow had not taken her RMD. Now the child is
contemplating disclaiming all or a part of his or her interest in favor of the trust for the
grandchild. Under the disclaimer rules, absent an “acceptance,” the child will be able to make the
disclaimer decision as late as nine months after the widow’s death. However, assume the widow
died in December so that the RMD for the year of death must occur by the end of the year (long
before the disclaimer decision must be made). The question is whether the RMD could be paid to
the child without the child being deemed to have “accepted” the IRA, thus cutting off the
disclaimer opportunity. According to Revenue Ruling 2005-36, 2005-26 I.R.B. 1368, the
primary beneficiary may take the RMD without being deemed to have accepted the IRA. The
ruling notes that the primary beneficiary should take both the RMD and postdeath earnings on
the RMD amount.
In PLR 201125009, automatic distributions of the deceased spouse’s RMDs were made
into a joint account held by the surviving spouse and the decedent which had already passed to
the surviving spouse under joint tenants with right of survivorship. The surviving spouse died
shortly after these deposits were made and the estate of the second spouse to die paid the account
to the estate and thereafter sought to disclaim not only the IRA but the RMD deposits that had
previously been made. Consistent with Revenue Ruling 2005-36, the IRS approved the
Copyright 2013, Gair B. Petrie - 35 -
disclaimer of the remainder of the IRA but concluded that the RMDs had been accepted by way
of the automatic deposit into the spouse’s account.
Even after this Revenue Ruling, the planner should take care to avoid an “acceptance” in
the processing of the RMD. Quite often, an IRA custodian will insist that, as a precedent to
taking the RMD, the primary beneficiary must go through the process of changing the account
from the decedent’s name into a “beneficiary” or “f/b/o” account in the name of the primary
beneficiary. Under the logic of the Revenue Ruling, this should not be a problem. However, this
type of reregistration process should be avoided if possible.
If the IRA is later to be segregated into separate IRAs under the separate account rules,
there does not need to be a reconciliation with regard to the RMD. In other words, the primary
beneficiary may, in the I.R.S.’s eyes, retain the full RMD amount.
Although not explicit in the ruling, there is the possibility that a distribution taken by the
primary beneficiary other than an RMD could be treated likewise. For example, under the logic
of this ruling, the primary beneficiary could take a withdrawal from the IRA and be treated as
having accepted that amount without accepting the entire IRA. Of course, to avoid a problem, the
practitioner would clearly document with the custodian that only the distribution is being
accepted.
The Revenue Ruling’s results are not contingent upon whether a disclaimer is structured
as a pecuniary or a fractional disclaimer. Either way, the primary beneficiary may retain the
RMD (and postdeath earnings), yet disclaim a pecuniary amount or fraction of the underlying
IRA.
Although not addressed in the ruling, the planner should give careful consideration to
how the separate IRAs will be “funded” after disclaimer. For example, if there is a pecuniary
disclaimer, the safest course of action may be a liquidation of the assets of the IRA so that the
separate IRAs may be funded with actual dollar amounts. In the case of a fractional disclaimer, it
may be safest to have the holdings of the IRA divided according to the fractions established
through the disclaimer. Otherwise, the disclaimant might be viewed as having exercised control
over the disclaimed assets following the disclaimer.
(2) Funding the credit trust; non-pro rata distribution planning
Under IRC §2010(c)(2) the DSUE of the first spouse to die may be transferred to the
surviving spouse for use in his or her estate provided that an election is made in the estate of the
first spouse to die by way of a timely filed federal estate tax return. This provision might be
helpful for couples with large retirement accounts as the account could pass to the surviving
spouse (instead of a credit shelter trust) without loss of the federal death tax exemption of the
first spouse to die. Of course, this is not available for Washington state estate tax purposes.
Example: Assume Jim and Sally have $8 million of community property comprised of
Jim’s $6 million IRA and $2 million of other assets. Assume Jim’s Will leaves his share of the
probate community assets to a credit shelter trust for Sally’s benefit and his IRA beneficiary
designation names Sally as outright beneficiary. At Jim’s death, Sally rolls the IRA into her
name and Jim’s $1 million interest in the other assets passes into a credit shelter trust for Sally’s
Copyright 2013, Gair B. Petrie - 36 -
benefit. Also assume that a federal estate tax return is filed for Jim’s estate transferring the
DSUE to Sally. When Sally dies, her estate will be $7 million comprised of her interest in the
other assets ($1 million) plus the $6 million IRA. She will have her $5 million federal death tax
exemption and, assuming Jim’s estate made the proper election, she will have the balance of
Jim’s unused exemption ($4 million) for total exemptions of $9 million. Therefore, no federal
estate tax will be owing. However, if Jim and Sally were Washington residents, there will be an
estate tax of $720,000. If instead, Jim’s estate employed the non-pro rata funding technique
described below to fund Jim’s credit shelter trust with the entire $2 million of other assets, the
Washington estate tax would have been decreased by $170,000.
Of course, another alternative to utilizing the DSUE of the first spouse to die yet, at the
same time, allowing the retirement assets to pass to the surviving spouse is the non-pro rata
funding technique described below.
In a community property state, a non-pro rata division of the former community property
and funding of the credit shelter trust is a technique to get the best of both worlds: a more fully
funded credit shelter trust and the income tax advantages of allocating all of the retirement
benefits to the surviving spouse. Here are the key pre-death and post-death steps involved in this
technique:
Pre-Death.
The account holder spouse designates the non-account holder spouse as primary
beneficiary with the proviso that should the non-account holder spouse disclaim,
the disclaimed proceeds will be payable to the credit shelter trust (or the estate of
the account holder spouse or a revocable living trust established by the couple).
The Will of the non-account holder spouse should include a provision stating that
the community property interest of the non-account holder spouse will pass
outright to the account holder spouse unless he or she disclaims in which case it
will pass as part of the non-account holder spouse’s estate.
The key estate planning documents (Will and/or revocable living trust) must
contain strong non-pro rata division and funding powers. Washington law gives
these powers to trustees under our general trust act and also gives these powers to
personal representatives by incorporation of the trust powers act. However, it is
advisable that the drafter include the power of the personal representative of the
estate, trustee of a revocable living trust and/or trustee of the credit shelter trust to
agree with the surviving spouse to a non-pro rata division of the former
community property (both probate and non-probate) and non-pro rata funding of
the credit shelter trust. The documents should also state that, in this process, it is
the testator’s desire that retirement benefits be allocated to the surviving spouse.
Steps to be Taken After Death.
After the death of the account holder, the surviving spouse will disclaim a
sufficient fraction of the IRA so as to permit a “swap” under which the surviving
Copyright 2013, Gair B. Petrie - 37 -
spouse’s community property interest in non-IRA assets may be exchanged for
the credit shelter trust’s interest in the disclaimed IRA. For example, assume the
couple owed a $2 million brokerage account and the husband had a $2 million
IRA (as a community property asset). Following death of the husband, his estate
would own a $1 million interest in the brokerage account and the wife would own
the other $1 million interest in the brokerage account. The wife would then
disclaim the husband’s one-half interest of the IRA ($1 million) so now the trust
has the right to the $1 million brokerage account and a $1 million interest in the
IRA. Then, the wife would in her capacity as personal representative of the estate
and trustee of the credit shelter trust, exchange the trust’s $1 million interest in the
IRA for the wife’s $1 million interest in the brokerage account. As a result, the
trust will have the $2 million brokerage account and the wife will have the $2
million IRA.
After the disclaimer, the spouse in his/her individual capacity and his/her
fiduciary capacity will enter into a “funding agreement” setting forth the non-pro
rata funding.
Thereafter, the spouse will apply to the IRA custodian for rollover or direct
rollover of the decedent’s IRA into an IRA in his or her name.
If the non-account holder spouse dies first, the process is the same as described
above (the surviving account holder spouse disclaims, completes a funding
agreement and, thereafter, simply retains ownership of the IRA). (Examples of all
of this language can be found in the appendices.) Note, technically a non-account
holder spouse’s community property interest in a retirement plan vanishes upon
his or her death. See the “Community Property” section below. Thus, the non-
pro rata technique may not be available when the non-account holder dies and the
retirement benefit in question is the account holder’s retirement plan.
There is no citable binding precedent that the foregoing swapping is income tax
free. However, the technique should fall within the protection of Revenue Ruling
76-83, 1976-1 C.B. 213 which stands for the proposition, generally, that the
division of former community property on a roughly equal basis is income tax
free. Two previous private letter rulings have approved the non-pro rata funding
involving revocable living trusts. PLR 199925033 and PLR 199912040.
Recently, the IRS again approved the non-pro rata “swapping” in a community
property state where the beneficiary of the decedent’s IRA was the account
holder’s estate and the estate thereafter poured over into trusts under the
decedent’s revocable living trust instrument. This is the equivalent of a situation
wherein a Will creates testamentary trusts. See PLR 201125047.
Of course, in the process of this non-pro rata funding, someone other than the spouse (the
estate, revocable living trust or credit shelter trust) ends up (on a temporary basis) as the
beneficiary of a portion of the IRA. As a result, the surviving spouse’s rollover is
actually a rollover through the entity. As described above, actually having the money
flow through the entity can be avoided by having the spouse directly apply for
Copyright 2013, Gair B. Petrie - 38 -
distribution following the disclaimer and the funding memorandum. However, some
states require that the disclaimer be given to the IRA custodian. In these cases, the
custodian may refuse to make payment directly to the spouse and instead may make
payment to the entity. Thereafter, the spouse will take distribution from the entity and
roll it over within 60 days. This is often referred to as a “indirect rollover”. The IRS has
issued a plethora of private letter rulings approving indirect rollovers where the surviving
spouse has the power and control as fiduciary to allocate and distribute the IRA to him or
herself. These rulings have been issued in the context of IRAs, retirement plans, living
trusts and estates. A broad sampling and brief description of these private letter rulings is
below. However, spousal control required by the IRS in these private letter rulings may
not actually be a legal requirement. IRC §402(c)(9) and 408(b)(4)(ii) state that an
account holder may take a distribution and roll it over within 60 days. IRC §402(c)(9)
goes on to state as follows:
If any distribution attributable to an employee is paid to the spouse of the
employee after the employee‘s death, the preceding provisions of this
subsection [rollovers] shall apply to such distribution in the same manner
as if the spouse were the employee.
The above language was echoed in the preamble to the final RMD regulation. It appears
that all the statute requires is that the amount attributable to the decedent be paid to the
spouse and there does not appear to be any prohibition on the payment coming through
an estate or trust. In fact, the preamble specifically states that a surviving spouse who
actually receives a distribution from the deceased spouse’s IRA is permitted to roll the
distribution over to his or her own IRA even if the spouse is not the sole beneficiary of
the deceased spouse’s IRA so long as the rollover is accomplished within sixty (60) days.
Thus, in looking at the private letter rulings that follow, bear in mind that the IRS may be
creating a requirement (spouse must have sufficient control to take the distribution
without the consent of any party) that may not exist.
In Private Letter Ruling 2000-32-044 (May 15, 2000), the estate was the designated
beneficiary of an IRA and a §403(b) annuity. The surviving spouse was the sole personal
representative of the estate and a one-third residuary beneficiary. The I.R.S. allowed the
surviving spouse to allocate the IRA and the §403(b) annuity to the surviving spouse in a “non-
pro rata distribution” in satisfaction of her one-third residuary beneficiary interest. The I.R.S.
also sanctioned the surviving spouse’s rollover of these benefits.
In Private Letter Ruling 2000-52-041 (Oct. 22, 2000), an IRA was payable to a revocable
living trust and the spouse had the right to remove the IRA. The service ruled that, following
removal, a rollover would be permitted. Although this Private Letter Ruling involved the pre-
2001 proposed minimum distribution regulations, it was issued after the 2001 proposed
regulations. In another set of facts reviewed by the I.R.S., the husband passed away without
naming a beneficiary of his IRA. The husband had died intestate. Under the laws of the state of
domicile, the wife was the sole beneficiary of an intestate estate. The wife was appointed
personal representative of the decedent husband’s estate. Under the IRA custodial account,
failure to designate a beneficiary resulted in the IRA proceeds being paid to the decedent’s
estate. The wife proposed to use her powers as personal representative to allocate the IRA
Copyright 2013, Gair B. Petrie - 39 -
proceeds to herself for rollover. In Private Letter Ruling 2001-29-036 (Apr. 23, 2001), the I.R.S.
approved the rollover. Unfortunately, at the end of the Private Letter Ruling the Service noted
that because the decedent passed away before the new minimum distribution regulations (issued
in 2001), the ruling did not address “any issues that may arise under the proposed regulations.”
In Private Letter Ruling 2003-46-025 (Aug. 21, 2003), the I.R.S. again ruled that the
surviving spouse may roll over an IRA when a living trust was the beneficiary and the spouse
had the unilateral power to allocate the IRA to herself. This ruling apparently confirmed that the
final regulations have not eliminated the indirect rollover technique.
Private Letter Ruling 200634065 contained a statement by the IRS broadly interpreting
the ability of the surviving spouse to complete a rollover through a trust or an estate. In this
case, the decedent’s IRA was payable to his estate. The decedent’s wife was the sole beneficiary
and personal representative of the estate. The wife’s plan was to have the custodian distribute
the IRA to the estate and from the estate to the spouse and, finally, from the spouse to a rollover
IRA within 60 days of the initial distribution. The IRS noted the distinction between an inherited
IRA (not eligible for a rollover) and the exception to the inherited IRA for payment to a
surviving spouse under IRC §408(d)(3)(C)(ii). The IRS then dealt with the statement in the final
§401(a)(9) regulations pertaining to the surviving spouse’s ability to elect to treat the decedent’s
IRA as his or her own. The IRS noted that this type of election is only available if the surviving
spouse is the sole beneficiary of the IRA with an unlimited right to make a withdrawal. In
addition, the IRS noted the statement in the regulations that the surviving spouse will not be able
to elect to treat the decedent’s IRA as his or her own if the beneficiary of the IRA is a trust (even
if the surviving spouse is the sole beneficiary of the trust). The IRS went on to differentiate this
language from the situation where the surviving spouse actually receives the distributed IRA
funds through an estate or trust and concluded as follows:
[A] surviving spouse who actually receives a distribution from an IRA is permitted to roll
that distribution over into his/her own IRA even if the spouse is not the sole beneficiary of the
deceased ’s IRA as long as the rollover is accomplished within the requisite 60-day period. A
rollover may be accomplished even if IRA assets pass through either a trust and/or an estate.
(Emphasis added.)This was repeated in PLR 201125047.
Here are more examples of the many Private Letter Rulings involving a rollover by a
surviving spouse where a trust (or estate) was named as beneficiary were issued:
• LR 200603032. In this private letter ruling, a trust was the beneficiary of an IRA. The
surviving spouse was sole trustee of the trust. The trust instrument gave the trustee the
power to withdraw the IRA and pay it to the surviving spouse. As trustee, the surviving
spouse proposed taking distribution of the IRA in the name of the trust then paying the
distribution over to the surviving spouse. Thereafter, the surviving spouse, in her
personal capacity, proposed rolling the amounts she received into an IRA.
The IRS stated that, although the regulations generally preclude a rollover if the IRA is
paid to the trust then to the surviving spouse (even if the spouse is the sole beneficiary of
Copyright 2013, Gair B. Petrie - 40 -
the trust), the rollover will be permitted under the facts of the ruling because the
surviving spouse was the sole trustee of the trust in addition to being the sole beneficiary
of the trust. This private letter ruling is a clear indication that previous letter rulings
issued by the IRS allowing “indirect rollovers” have not been revoked.
• LR 200603036. This private letter ruling involved a retirement plan payable to a trust for
a surviving spouse. Under the terms of the trust, the surviving spouse was entitled to all
of the income and trust principal for her health, maintenance, education and support. The
surviving spouse was sole trustee of the trust and represented to the IRS that, as trustee,
she had the power to direct payment of the total amount of the retirement plan directly
from the retirement plan to herself. The surviving spouse proposed to the IRS that she be
allowed to rollover this distribution. Following the logic of the preamble (and citing
Reg. 1.402(c)-2) the IRS stated that, even though the spouse was not the beneficiary of
the retirement plan, payment directly to the surviving spouse at the direction of the
trustee was enough to permit the surviving spouse to complete the rollover.
• LR 200605019. This letter ruling involved several IRAs, several problems and overall a
nasty situation. Nonetheless, the IRS permitted an indirect rollover of some IRA funds
(i.e., distribution to the trust then to the surviving spouse followed by a rollover) and
distribution of other IRA funds directly from the IRAs to the spouse at the spouse’s
direction as trustee of the trust. All were approved for rollover.
• LRs 200644028, 200644031 and 200705032. All of these rulings deal with indirect
rollovers by a surviving spouse:
• In LR 200644028, the decedent died after his RBD with an IRA. A trust was beneficiary.
The wife was the sole trustee and she proposed directing the custodian to do an IRA-to-
IRA transfer into an IRA in wife's name. The IRS permitted this under a narrow reading
of Reg. 1.408-8, Q-5A-5(a). The IRS interprets this regulation as preventing a spouse
from electing to treat the decedent's IRA as her own (but not preventing the spouse from
a rollover or IRA-to-IRA transfer).
• In LR 200644031, the decedent died after his RBD naming an estate as beneficiary of his
IRA. The surviving spouse was the sole personal representative and, after specific
bequests, the entire estate passed to the surviving spouse. Moreover, the IRS noted that
the surviving spouse had the right to make non-pro rata distributions in settling the
estate.
The surviving spouse proposed to allocate the IRA to the spouse in a non-pro rata
distribution and direct the custodian of the IRA to complete a direct IRA-to-IRA transfer
into an IRA in the surviving spouse's name.
The IRS noted that the surviving spouse could not, in these circumstances, elect to treat
the IRA as her own. However, if the surviving spouse actually receives the distribution,
she may roll it over, even if she is not the designated beneficiary. In this case, the IRS
treated the IRA-to-IRA transfer as such a rollover.
Copyright 2013, Gair B. Petrie - 41 -
• In LR 200705032, the decedent died naming his revocable living trust as beneficiary of
several IRAs. The revocable living trust provided for a marital deduction trust which was
funded with a pecuniary formula. Under the terms of the marital deduction trust, the
spouse had an absolute right to withdrawal principal. The spouse proposed to the IRS
that the IRAs be distributed to the trust and, thereafter, immediately distributed to the
spouse for rollover. Again, the IRS narrowly read Reg. 1.408-8QA5 so as to prevent a
spouse from electing to treat an IRA payable to a trust for the benefit of the spouse as his
or her own. Rather, the IRS stated as follows:
A surviving spouse who actually receives a distribution from an IRA is
permitted to roll that distribution over into his/her own IRA even if the
spouse is not the sole beneficiary of the deceased's IRA as long as the
rollover is accomplished within the requisite 60-day period. A rollover
may be accomplished even if IRA assets pass through either a trust and/or
an estate.
This ruling is also interesting from the standpoint that no mention was made of the
possibility of IRD acceleration by virtue of the allocation of the IRAs to the marital trust
in satisfaction of the pecuniary marital gift. Nonetheless, this is not a position the planner
should get him or herself into. If there is the possibility of allocating an IRA to a marital
bequest, the marital bequest should be structured as a fractional gift.
PLR 200704033 involved the reformation of a trust to permit a spouse the right to
allocate an IRA to herself without anyone's consent. Based on this, the spouse was permitted to
complete a rollover. (Also, in this ruling, there was a problem with the 60-day rollover period
which the IRS waived.)
PLR 200703047 also involved a reformation allowing two IRAs to be paid to the
surviving spouse. Also, the 60-day rollover deadline was botched in this private letter ruling and
the IRS permitted an extension.
In PLR 200703035 an estate was beneficiary, but the spouse was the sole personal
representative and had the right to allocate the IRA to herself. The rollover occurred by a
distribution from the account holder's IRA to a non-IRA account of the spouse. The non-IRA
account of the spouse was to be rolled into an IRA in the spouse's name within 60 days.
However, the 60-day time frame was missed. Again, the IRS approved the rollover and waived
the 60-day rollover deadline.
In PLR 200705032, the question was an independent trustee's allocation of an IRA to a
trust over which the spouse had a right of withdrawal. The IRS noted that this allocation was
consistent with the co-trustees' fiduciary obligations and permitted the spouse to rollover the IRA
following its allocation to said trust.
As a result of the above, the prudent course of action following death of the account
holder spouse and a disclaimer by the surviving spouse, may be to have the surviving spouse in
his or her individual capacity and as personal representative and trustee, to request an actual
distribution of the deceased spouse’s IRA to the surviving spouse. The surviving spouse would
Copyright 2013, Gair B. Petrie - 42 -
then rollover within the 60-day rollover period. In the non-pro rata settlement of the former
community property, non-IRA assets would be allocated to the credit shelter trust in exchange
for the portion of the IRA disclaimed by the surviving spouse. This may allow the practitioner to
be within the 1999 private letter rulings as well as make use of the theory that a spouse may
rollover a distribution made directly to him or herself at the direction of a trustee. The added
advantage to this approach is that the 1099 will be issued by the IRA custodian directly to the
surviving spouse which, of course, helps to prevent attracting unnecessary scrutiny from the IRS.
It should be noted that these 2006 letter rulings follow similar logic of a letter ruling issued late
in 2005 (LR 20054901).
In PLR 200938042, an IRA was payable to a testamentary trust for the surviving spouse
created under the decedent’s will. The surviving spouse disclaimed her interest under the trust.
Apparently, under the IRA beneficiary designation and custodial account, this caused the
beneficiary designation to “fail” so that, under the custodial account, the estate became
beneficiary. The surviving spouse thereafter sought to allocate the IRA from the estate to herself
as part of her outright bequest from the estate and requested the IRS to sanction the rollover.
The IRS ruled that because the residue of the estate passes outright to the surviving spouse and,
as a result of the disclaimer, the residue of the estate included the IRA, the spouse essentially
became the sole beneficiary of the IRA. The IRS noted that the surviving spouse may not elect
to treat the IRA as her own, but may, by an actual distribution, rollover the IRA into an IRA in
her name.
In PLR 200944059, the IRS declined to allow an indirect rollover. In this case, the IRA
was payable to a trust for a surviving spouse. She was the sole trustee and income beneficiary of
the trust. Distributions to the trust were permitted based on health, maintenance, education and
support. Nonetheless, she obtained a state court order allowing her to cause the IRA to be
distributed to the trust and then distributed to her. She asked the IRS for a ruling allowing her to
roll the funds into an IRA in her name.
The IRS stated that because she did not have unrestricted access to the IRA she could not
be treated as the IRA beneficiary for rollover purposes. Moreover, the IRS noted that distribution
of the IRA to the spouse would have constituted a gift from the remainder beneficiaries.
Based on IRC §402(c)(9) and the preamble to the RMD regulations, the IRS may be
wrong on this one.
(3) QTIP trust
As discussed previously, tremendous tax advantages can result if the nonworking spouse
is the outright beneficiary of an account. A client should forego these benefits only if significant
countervailing nontax reasons exist. For example, the working spouse may wish to prevent the
nonworking spouse from having direct control over the working spouse’s assets. In such a case,
the client may wish to create a credit shelter trust to be funded with the credit shelter amount and
a QTIP trust to be funded with the remainder of the working spouse’s estate. Because of the
income tax liability associated with the account, the planner will most likely want to name a
QTIP trust as beneficiary. Of course, a lump sum payment to the QTIP trust could easily qualify
Copyright 2013, Gair B. Petrie - 43 -
for the estate tax marital deduction. Priv. Ltr. Rul. 97-29-015 (Apr. 16, 1997). Dribbling out the
account to the QTIP trust, however, is a tricky task.
Any distribution from the retirement plan or IRA must comply with I.R.C. §401(a)(9). In
short, a minimum distribution must be made each year and the period of distribution must
comply with the rules of §401(a)(9). It is important to note that the I.R.C. §401(a)(9) minimum
distribution is not tied to the actual income earned by the account. In the early years of a
“dribble-out” distribution, it is typical for the minimum distribution required by §401(a)(9) to be
quite less than the actual income earned by the account. As discussed above, a trust should only
be designated as a beneficiary with great care.
Property qualifies for the marital deduction under the QTIP rules of I.R.C. §2056(b)(7)
only if (a) the surviving spouse is entitled to all of the income payable at least annually during his
or her lifetime, (b) the surviving spouse is the only one to whom any distributions can be made
during his or her lifetime, (c) the surviving spouse has the right to require the trustee promptly to
convert unproductive property to productive property, and (d) a proper election is made on I.R.S.
Form 706 (United States Estate (and Generation-Skipping Transfer) Tax Return.
Revenue Ruling 2000-2, 2000-3 I.R.B. 305, replaced and superseded Revenue Ruling
89-89, 1989-2 C.B. 231, with regard to qualification of an IRA as QTIP property when the IRA
is payable to a QTIP trust. Under the facts of the ruling, the decedent died before his required
beginning date and a testamentary QTIP trust was named as beneficiary of the decedent’s IRA.
The decedent’s wife was the income beneficiary of the QTIP trust and the decedent’s children
were the sole remainder beneficiaries of the trust. The testamentary QTIP trust fully complied
with the requirements of I.R.C. §2056(b)(7). In addition, language in the QTIP trust gave the
surviving spouse the power to demand that, in any year, the income of the IRA be withdrawn
from the IRA, passed through the QTIP trust, and distributed to the spouse. In the Revenue
Ruling, the I.R.S. noted that the QTIP trust was a “qualified trust” for determining minimum
distributions after the decedent’s death. The I.R.S. also stated that the beneficiaries taken into
account to determine minimum distributions were the surviving spouse and the decedent’s
children. This is consistent with Treas. Reg. §1.401(a)(9)-5, Q-7, A-7(c)(3)(Ex. 2). Because the
surviving spouse had the shortest life expectancy, minimum distributions to the trust would be
computed with reference to the life expectancy of that surviving spouse and were required to
begin on December 31 of the calendar year following the calendar year of the decedent’s death.
In structuring distributions to a QTIP trust, the requirements of the income and estate tax
rules must be satisfied. The I.R.S. provided important guidance in Revenue Ruling 2000-2. .To
satisfy the rules, the lawyer must study the distribution provisions of the applicable retirement
plan or IRA. Many IRAs permit virtually any type of distribution method and allow the account
holder or beneficiaries to make withdrawals of any amounts at any time, provided the §401(a)(9)
rules are satisfied. Some qualified retirement plans allow the death beneficiary the option of
accelerating and withdrawing the account at any time after the working spouse’s death. If the
planner is dealing with a document where such flexibility exists, meeting the requirements of
Revenue Ruling 2000-2 may be fairly easy. However, if the plan document is restrictive with
regard to distributions, it may be virtually impossible for the planner to structure the beneficiary
designation and QTIP trust language to satisfy the requirements of Revenue Ruling 2000-2.
Copyright 2013, Gair B. Petrie - 44 -
The IRS released Revenue Ruling 2006-26 which deals with the concept of “Q-Tipping”
an IRA. The Revenue Ruling builds upon Revenue Ruling 2000-2 by including an extensive
discussion of the interplay between various income and principal laws and the requirement that
all income be distributed to (or be subject to withdrawal by) the surviving spouse. Essentially,
situation 1 and situation 2 described in this new Revenue Ruling sanction Q-Tip treatment where
the trustee has the right to convert principal to income or to convert the trust to a 4% unitrust as
provided by RCW 11.104A.020 and RCW 11.104A.040. However, in regard to the power to
convert principal to income, the Revenue Ruling dealt with the Uniform Principal and Income
Act (“UPIA”) version of the law which states that only 10% of any distribution (i.e., an RMD)
will be considered income. In this regard, the IRS notes that the 10% figure will not satisfy the
income requirements for Q-Tip treatment. Therefore, the trustee must, under said UPIA
provision, exercise the authority to convert additional amounts to income. In response to
Revenue Ruling 2006-26, the Uniform Law Commission amended the revised Uniform Principal
and Income Act to provide the “trust within a trust concept” under which internally generated
income of the IRA (determined as if it were a separate trust) would be treated as income in the
case of a Q-Tip trust.
RCW 11.104A.180 was recently amended to provide the trust within a trust approach
(RCW 11.104A.180(b)). However, if the IRA does not generate or calculate income in such
fashion, four percent (4%) of the total value of the IRA will be treated as income. RCW
11.104A.180.
The Revenue Ruling also addresses which beneficiaries of the Q-Tip trust are taken into
account to determine the beneficiary with the shortest life expectancy. The IRS specifies that,
unless the Q-Tip trust is a “conduit trust” (which makes little sense in the context of a Q-Tip
trust) the beneficiaries will be the surviving spouse and the remainder beneficiaries.
Finally, as stated above, Q-Tipping an IRA has a tremendous income tax cost as
distributions, both during and after the surviving spouse’s life will be computed with reference to
the surviving spouse’s life expectancy. In short, the possibility to stretch out the IRA is lost.
Moreover, any portion of the RMDs accumulated by the trustee may be subject to tax at very
high trust income tax rates.
(4) Charity as beneficiary
If the account holder is charitably inclined, the best overall tax results may be achieved if
he or she leaves a retirement plan or IRA to a tax-exempt charity. Of course, this does not apply
to a Roth account because income taxes have already been paid. As charitable organizations are
exempt from income taxes, no income taxes will ever be imposed on the deferred income
represented by the account. However, the client will have to balance the benefits of making the
gift to charity against the significant additional economic growth that the client’s family might
enjoy over an extended distribution period if the account were left to them. In other words, from
a practical standpoint, naming the charity as beneficiary amounts to a gift of both the date of
death value of the account as well as the substantial future economic growth that is possible
under I.R.C. §401(a)(9). The planner should, of course, verify the exact name of the charity and
confirm that it is an exempt organization. Based on the author’s calculations, there are scenarios
in which the account holder’s children (or GSTT trusts for grandchildren) would be better off
Copyright 2013, Gair B. Petrie - 45 -
receiving IRA or retirement plan benefits, rather than cash or securities, because the power of
continued income tax-deferred growth is quite significant. Generally, this is the case when there
are sufficient nonretirement plan or IRA assets to pay estate taxes on the IRA or retirement plan
and the children will have the economic ability to take only minimum distributions for some
period of time.
Care should be taken in naming a charity as beneficiary of part of the account. A charity
is not a “qualified trust” for purposes of I.R.C. §401(a)(9). Naming the charity as a sole
beneficiary of an account does not create any particular problems with the minimum distribution
rules, because after the required beginning date the participant will be entitled to use the
Minimum Distribution Table to determine distributions during his or her lifetime. The same
treatment would be available after the required beginning date even if the charity and individual
beneficiaries were named beneficiaries of a particular account. However, when beneficiaries
include both individuals and a charity, separate accounts under Treas. Reg. §1.401(a)(9)-8, Q-2,
A-2(a) or separate IRA accounts should be considered, to ensure that following the participant’s
death, the individual beneficiaries will have the right to take distributions over their respective
lifetimes.
It should be noted that during the participant’s lifetime, a distribution directly to the
charity will be treated as a distribution to the participant followed by a contribution to the
charity. Any such distribution is subject to regular income tax and the I.R.C. §72(t) penalty for
premature distribution. Under the Pension Protection Act of 2006, special rules apply to
Qualified Charitable Distributions (“QCDs”) for 2012 and 2013. Under these rules, a taxpayer
may exclude from income QCDs of up to $100,000 per year. There are several requirements for
a QCD:
• The QCD must be made directly from the IRA to the charity (the account holder cannot
receive the funds him or herself).
• The QCD must be made after the date the IRA owner has attained age 70½.
• The IRA may be a regular or Roth IRA but may not be a SEP or Simple.
• The charity must be one described in I.R.C. §408(d)(8)(F) which excludes donor advised
funds and certain supporting organizations under I.R.C. §509(a)(3).
These changes were made by way of amendments to I.R.C. §408(d)(8)(F). Interestingly,
a taxpayer’s QCD will be considered as part of the taxpayer’s RMD for the calendar year.
• With respect to the charitable rollover provisions of §408(d)(8), the following
clarifications are made in the Notice 2007-7:
• The limit is $100,000, regardless of how many IRAs the owner has and regardless of
whether the taxpayer is married filing a joint return. If both a husband and wife each
have IRAs, they each have a $100,000 limit.
Copyright 2013, Gair B. Petrie - 46 -
• The rollover must be directly to a charity described at §170(b)(1)(A) and may not be to a
supporting organization described at §509(a)(3) or a donor advised fund described at
§4966(d)(2).
• Although a direct rollover may not occur from a simple IRA or a SEPP IRA, the Notice
permits the direct rollover from such an arrangement if it is not an "ongoing Simple or
SEPP." An ongoing Simple or SEPP is one for which an employer made a contribution
for the plan year ending with or within the account holder's taxable year in which the
charitable contribution will be made.
• The Notice expands the charitable rollover to an f/b/o IRA. If the beneficiary of the f/b/o
IRA is over 70½ years of age, such beneficiary may complete a charitable rollover.
• The charitable rollover is not subject to withholding and the custodian may rely upon
"reasonable representations" made by the IRA owner.
• The charitable rollover may be made by a check payable from the IRA custodian to the
charitable organization even though the check is delivered by the IRA owner.
• The charitable rollover will not be considered a prohibited transaction under IRC §4975
because, for prohibited transaction purposes, the distribution is treated as having been
received by the account holder. Thus, it appears that a charitable pledge may be satisfied
through the charitable rollover.
• Under the 2010 Tax Relief Act, there is a special rule for QCDs made in January of 2011.
These QCDs may be treated as if made on December 31, 2010 (so as to count towards a
2010 $100,000 limitation) and so as to satisfy the taxpayer’s RMD for 2010.
Charitable Trusts. Charitable trusts are arrangements under which tax-exempt
organizations ("Charities") and individual heirs share the economic benefits of a trust in
successive fashion. A Charitable Remainder Trust ("CRT") is a trust under which the individual
beneficiary or beneficiaries receive payments for some specified time period; and, at the end of
the specified period, the remaining trust principal is distributed to Charities. For example, a CRT
may be designed to provide benefits for a spouse during his or her lifetime; and, upon his or her
death, pass to Charities. There are two types of CRTs:
A charitable remainder annuity trust or "CRAT" is an arrangement in which a fixed dollar
amount is distributed from the trust to the individual beneficiary each year.
A charitable remainder unitrust or "CRUT" is a trust which pays the individual
beneficiary a fixed percentage (at least 5% but no more than 50%) of each year's opening
value of the trust. This type of distribution is a "unitrust distribution". Because CRUTs
tend to be more flexible and provide some inflationary protection to the individual
beneficiaries, they are more common than CRATs.
CRTs must comply with rigorous rules under IRC §664 CRTs, if so qualified, are exempt
from income tax. Thus, IRA distributions to a CRT may be exempt from income tax.
Copyright 2013, Gair B. Petrie - 47 -
However, as will be discussed below, what is known as the unrelated business taxable
income or "UBTI" rules apply to CRTs.
The second type of charitable trust is known as a charitable lead trust or "CLT". Under
this arrangement, the charity is provided with an annuity or unitrust distribution for a
period of time; and, at the end of such period, the balance of the trust is distributed to or
in trust for individual beneficiaries. Unlike CRTs, however, CLTs are not exempt from
income taxes. Thus, a CLT would have to pay income tax on amounts it receives from an
IRA. Because of this, creating a CLT as beneficiary of your IRA will likely not be
advantageous. Therefore, the balance of this discussion will focus on CRTs.
Here is how the RMD rules work with a CRT:
RMDs While Account Holder is Alive. While the account holder is living, RMDs will be
computed under the "Uniform Lifetime" table of the regulations.
The key planning move that would change the RMD calculation would be the conversion
of all or a part of the IRA to a Roth IRA. After 2009, a taxpayer will be able to convert
all or any portion of an IRA to a Roth IRA as there will no longer be a prohibition on
individuals with adjusted gross income of more than $100,000 making such a conversion.
The portion of the IRA converted to a Roth IRA will no longer be subject to RMD rules
while the account holder is living. Moreover, if the spouse is beneficiary of the Roth
IRA, there will be no RMDs during his or her lifetime as well. Any portion of an IRA
which is converted to a Roth would likely be better left to the account holder's spouse and
ultimately to children as opposed to a CRT.
RMDs Following Death. Following the account holder's death, RMDs to the CRT will
be computed as follows: The first RMD will be determined using a divisor equal to the
account holder's life expectancy under Treasury tables based on his/her actual age at
death. For example, if the account holder passed away at age 77, the initial divisor would
be 12.1. Each year thereafter, the divisor would be reduced by 1. This creates a
relatively fast distribution from the IRA to the CRT. If the account holder dies before the
required beginning date, the CRT must take distribution under the five (5) year rule.
However, if the CRT is tax-exempt, the CRT does not pay income tax on these
distributions. Moreover, the CRT may reinvest these proceeds. Earnings on the
reinvestments, likewise, are tax-free to the CRT assuming it is tax-exempt.
Although the CRT itself may be tax-exempt, distributions from the CRT to the individual
beneficiary are not. Instead, distributions to the individual beneficiary are classified as
income to the individual beneficiary according to what is known as the "four-tier
system". Essentially, as amounts are received by the CRT tax-free, the CRT must,
nonetheless, keep a running total of the amount of different types of income it has
received (i.e., ordinary income, capital gain, tax exempt income or principal). Funds
received by a CRT from a decedent's IRA are allocated to the ordinary income running
total.
Copyright 2013, Gair B. Petrie - 48 -
When the individual beneficiary of the CRT receives his or her annual distribution from
the CRT, the taxation of such distribution is determined according to a priority in the
four-tier system. Not surprisingly, until the CRT's ordinary income tier is completely
distributed by way of annual distributions to the individual beneficiary, such distributions
are ordinary income to the individual beneficiary. For example, if an account holder
creates a CRT and designated it as beneficiary of all or part of the IRA and such CRT is
structured so that his or her spouse is the individual beneficiary, (i) distributions from the
IRA to the CRT may be exempt from income tax and (ii) distributions to the spouse from
the CRT will be taxed to his/her as ordinary income.
A CRT in which the spouse is the sole individual beneficiary will qualify for the estate
tax marital deduction and the Charity's interest in the CRT will qualify for the charitable
estate tax deduction. Thus, if the CRT is structured this way, there will be no estate tax
on the CRT. Under the Internal Revenue Code, the foregoing treatment is only permitted
if the spouse is the sole individual beneficiary of the CRT.
As mentioned at the beginning of this discussion, CRTs are subject to the Tax Code's
UBTI rules. Under Prop. Reg. 1.664-1, a CRT with UBTI no longer loses its tax exempt
status, but an excise tax is imposed and is equal to the full amount of the UBTI. This, of
course, would cause a loss of a key benefit of naming a CRT as beneficiary of the IRA.
Although most commentators believe that IRA distributions to a CRT should not be
treated as UBTI, this issue has not been conclusively resolved. In PLR 200230018, the
IRS ruled that a payment from an IRA directly to a charity did not constitute UBTI. If an
account holder were to proceed with a CRT to be beneficiary of all or a portion of an
IRA, it may be wise to get a private letter ruling from the Internal Revenue Service
concerning this key issue.
If a charity is a beneficiary of an IRA or retirement then as long as the charity is a
qualified recipient under I.R.C. §2055, the estate will be entitled to a charitable deduction.
On a couple of occasions, the IRS has allowed the personal representative of an estate to
allocate IRAs in non-pro rata distributions to charitable beneficiaries. In other words, the estate
was designated as beneficiary of the IRA and there were charitable gifts under the decedent’s
Will. The Service permitted allocation of the IRAs to the charitable beneficiaries without
causing income to the estate under IRC §691. LR 20052004, LR 200633009 and 200826028.
• LR 200644020 illustrates the importance of form over substance when it comes to gifts to
charities of an IRA. In this ruling, a revocable living trust was designated beneficiary of
the decedent's IRA. The dispositive provisions of the trust called for a $100,000
distribution "in cash or in kind" to charities. The residue of the trust was to be distributed
to the decedent's children. There was no specific direction that IRA proceeds payable to
the trust be used to satisfy this pecuniary charitable bequest.
The trustee directed the IRA custodian to create f/b/o IRAs for each of the charities to
satisfy the $100,000 charitable bequest.
Here is how the IRS analyzed this situation:
Copyright 2013, Gair B. Petrie - 49 -
• The IRA was IRD under IRC §691 and its allocation to the charities was not
specifically required by the trust, therefore, the allocation to the charities
constitutes a sale, exchange or other disposition under IRC §691(a)(2).
• As a result, the trust has income of $100,000. However, because the trust did not
require that its income be set aside for charitable purposes, no income tax
charitable deduction is available under IRC §642(c)(1).
The foregoing result is premised on the old Kenan v. Comm'r, 25 AFTR 607 (2d Circ.
1940) case. Stated another way, this result is premised on the fact that the charitable
bequest under the trust was pecuniary and not fractional.
One could argue that the IRS reads IRC §691(a)(2) too narrowly and that the trustee's
general power to make distributions in cash, in kind or both would put the charities in a
position of an entity acquiring the IRA pursuant to said entity's right to receive such
amount. This is a dangerous precipice to stand on. There are ways to avoid the results of
this ruling:
• The easiest (and best) way to avoid the result of the ruling is to directly designate
the charity as beneficiary of a fraction of the IRA. If the decedent has a dollar
amount in mind, say $100,000, the safest approach in the IRA beneficiary
designation would be as follows: "That portion of my IRA determined with
reference to a fraction, the numerator of which is $100,000 and the denominator
of which is the date of death value of my IRA". This method will also satisfy the
requirements for separate IRA treatment with regard to the non-charitable portion
of the IRA.
• If the planner wishes to have the IRA payable to a living trust (or estate) and
thereafter divided among charitable and non-charitable beneficiaries, care should
be taken to either set up the charitable bequest as a fractional gift or make it a
pecuniary gift with the direction that it be satisfied first with IRAs. See LR
200608032. Even if the planner takes one of these alternate approaches, running
the IRA through a trust or estate involves additional issues with regard to DNI,
the trust's treatment as a qualified trust and identification of beneficiaries for
RMD purposes.
• If the charity had been a residual beneficiary, then, under IRC §691, there would
be no acceleration when the f/b/o IRA is allocated to it. LR 200652028.
The foregoing discussing concerning charitable gifts applies to any form of pecuniary gift
that might be satisfied with an IRA. However, it is interesting to note that LR 200705032
allowed an IRA to be allocated to a surviving spouse to satisfy a pecuniary marital
bequest and, thereafter, the surviving spouse completed an "indirect rollover."
LR 201013033. In this case, the decedent did not name a beneficiary of the IRA. Under
the custodial account, the decedent’s estate became the beneficiary. The decedent’s
estate was to “pour over” to a living trust. The living trust provided that a charity receive
Copyright 2013, Gair B. Petrie - 50 -
a percentage of the trust. The estate proposed transferring the IRA to the trust followed
by a transfer of the IRA by the trust to the charity in satisfaction of its fractional gift. The
IRS concluded that this transfer did not accelerate or cause taxation of the IRA income to
the trust because the charity was a specific residuary legatee within the meaning of Reg.
1.691(a)-4(b)(2).
In Private Letter Ruling 2002-34-019 (May 13, 2002), the I.R.S. ruled that a non-pro rata
allocation of various IRAs to charities that were residual beneficiaries of an estate did not
accelerate income under I.R.C. §691.
LR 200845029. Under this private letter ruling, a defined benefit plan was payable to an
estate. A charity was a residual beneficiary of the estate. The estate proposed to assign
its right to the defined benefit plan to the charity.
The IRS ruled that under 691(a)(2) an item of IRD may be transferred without
accelerating income tax to the person entitled to such item. The charity’s position as
residual beneficiary entitled it to the item of IRD so that the transfer by the estate did not
accelerate income tax.
(5) Estate Tax Allocation Issue
Let’s assume the decedent had a §401(k) plan account and an IRA. Also assume that
under the decedent’s estate plan, he did the following: (i) by beneficiary designations, left the
retirement plan and IRA (“Retirement Benefits”) to Child A and (ii) by Will and/or other
dispositive documents, all other assets to Child B. Let’s also assume that decedent’s Will either
says nothing about estate tax apportionment or invokes RCW 83.110A. Let’s assume that
Child B is the personal representative of the estate and Child A has no assets other than the
inherited Retirement Benefits.
As an initial matter, there is no federal estate tax apportionment with respect to
Retirement Benefits. In fact, the federal estate tax apportionment applicable to life insurance
proceeds does not apply to annuities.
Under RCW 83.110A.030, the estate taxes attributable to the IRA are apportioned to
Child A. Assuming Child A is a deadbeat, RCW 6.15.020 prevents attachment of the IRA and
IRC §401(a)(13) (and its ERISA counterpart) prevent attachment of the §401(k) plan account.
This means that Child B, as personal representative, would be required to pay the taxes
him or herself as required by RCW 83.110A.080 and, based on this payment, have a right of
reimbursement under RCW 83.110A.090. I suppose this would allow Child B to attach RMDs
and other distributions as taken by Child A.
Let’s assume that, instead of the Retirement Benefits being paid to Child A in our
example, the Retirement Benefits are, instead, payable to a trust of which Child A is the
beneficiary. In this case, RCW 83.110A.030 does require some apportionment to the principal of
the trust. However, the “person” responsible to pay the taxes so apportioned would be the trust
itself and the trustee could assert the protection of ERISA and RCW 6.15.020. In short, I think
the result would be the same.
Copyright 2013, Gair B. Petrie - 51 -
It should be noted that IRC and ERISA protection for the §401(k) plan is subject to a
federal tax levy. Thus, it is possible with the Retirement Benefits that, if the taxes were not paid,
Child B could face transferee liability and a levy could be imposed upon the §401(k) plan
account and the IRA under IRC §6901. I am not sure if this would actually happen as
Washington’s estate tax apportionment provisions seem to require that Child B pay the tax and
seek reimbursement from Child A.
§13.4 GIFT TAX
When completing a beneficiary designation or electing a form of payout on behalf of the
working spouse, the planner must also consider the federal gift tax implications. Prior to the
1986 Act, I.R.C. §2517(a) provided that the exercise or nonexercise by an employee of an
election or option whereby plan benefits would become payable to any beneficiary after the
employee’s death would not be considered a gift. Former I.R.C. §2517(c) provided that a transfer
of retirement benefits to a designated beneficiary would not be treated as a gift of the
nonworking spouse’s community one-half interest by the nonworking spouse. The 1986 Act
repealed I.R.C. §2517. If the nonworking spouse waives, before the death of the participant, any
survivor benefit or right to such survivor benefit under I.R.C. §401(a)(11) or I.R.C. §417, the
waiver is not to be treated as a transfer of property by gift. Under I.R.C. §2523(f)(6), the
acceptance of a qualified joint and survivor annuity form of payment by the nonworking spouse
will be treated as a gift from the working spouse. That gift will qualify for a marital deduction
unless the working spouse elects otherwise.
§13.5 SPOUSAL PROTECTION UNDER ERISA
I.R.C. §§401(a)(11) & 417 and ERISA provide safeguards for the nonworking spouse’s
interest in the working spouse’s qualified retirement plan benefits. Generally, distributions from
a qualified plan that begin during a participant’s life must be in the form of a single life annuity
with respect to a single participant, or a qualified joint and survivor annuity with respect to a
married participant. I.R.C. §401(a)(11)(A)(i). A qualified joint and survivor annuity is an
annuity payable over the joint lives of the working and nonworking spouse with payments to the
nonworking spouse being equal to one-half of those made to the working spouse. I.R.C.
§417(b)(1). For example, if the working spouse’s lifetime payments were $300 per month, the
nonworking spouse’s monthly payments must be $150 after the death of the working spouse.
If a married participant dies before distributions from a retirement plan have begun, the
participant’s spouse is entitled to a preretirement survivor annuity. I.R.C. §401(a)(11)(A)(ii). In
the defined benefit plan context, a preretirement survivor annuity equals what the surviving
spouse’s benefits would have been under the survivor portion of a qualified joint and survivor
annuity. I.R.C. §417(c)(1). Under a defined contribution plan, the surviving spouse is entitled to
an annuity payable over the nonworking spouse’s lifetime from one-half of the deceased
participant’s account balance. I.R.C. §417(c)(1).
Profit sharing plans (i.e., §401(k) plans) receive a limited exemption from the annuity
requirements. This exemption is available only if the plan provides that upon his or her death, the
participant’s benefit is payable in full to the participant’s surviving spouse, and the participant
does not elect payment of benefits in the form of a life annuity. I.R.C. §401(a)(11)(B)(iii). The
Copyright 2013, Gair B. Petrie - 52 -
annuity requirements, however, attach to any profit sharing account that represents benefits
formerly held by a plan that were subject to the annuity requirements. Id. Importantly, the
annuity requirements do not apply to IRAs.
In short, there are valuable federal property rights for the spouse of a participant. In the
case of a typical money purchase pension plan or other plan fully subject to the annuity rules, the
spousal protection applies to any distributions made during the participant’s lifetime and at the
participant’s death. In the case of a plan not subject to the annuity requirements (i.e., a profit
sharing or §401(k) plan), the surviving spouse must be the sole beneficiary of the participant’s
account, unless the spouse consents otherwise. Essentially, under the annuity requirements, the
spouse is given a one-half interest in the plan. Under the profit sharing plan exception, the spouse
has no rights during the participant’s lifetime (other than those provided under community
property laws) but is entitled to be the sole beneficiary at the participant’s death. A plan subject
to the spousal annuity rules may require the participant and spouse to be married one year before
the spousal annuity rules apply to the participant’s account. These rights may only be waived in
accordance with the terms of the applicable plan document.
Of course, the spousal rights of the Retirement Equity Act of 1984 (REA), Pub. L. 98-
397, 98 Stat. 1426 (1984), can create problems in the area of prenuptial agreements. In this
context, the practitioner must differentiate between the divorce and the death setting. In Critchell
v. Critchell, 746 A.2d 282 (D.C. 2000), the court held that a future spouse’s waiver of claims
against a retirement plan benefit may be upheld in a divorce setting but will not be valid at the
participant’s death. See also Hurwitz v. Sher, 982 F.2d 778 (2d Cir. 1992), cert. denied, 508
U.S. 912 (1993); Treas. Reg. §1.401(a)-20, Q-28, A-28. In the case of Ford Motor Co. v. Ross,
129 F. Supp. 1070 (2001), the issue was a prenuptial agreement under which the future spouse
waived all interest in retirement benefits. After marriage, the spouse never signed the proper
consents and waivers required by REA. The participant died and the spouse claimed her ERISA
protected benefits. Citing Boggs v. Boggs, 520 U.S. 833, 117 S. Ct. 1754, 138 L. Ed. 2d 45
(1996), the court held that ERISA preempted the prenuptial agreement. Moreover, the court
rejected an attempt by the decedent’s children to impose a constructive trust on the benefits, as
such a constructive trust would frustrate the ERISA spousal annuity rights. The Fourth Circuit
Court of Appeals confirmed that a prenuptial agreement does not satisfy the requirements of
REA. Hagwood v. Newton, 282 F.3d 285 (2002). In that case, the spouse had executed a
prenuptial agreement but not the required REA waivers. Thus, on the death of the working
spouse, the nonworking spouse was entitled to the benefits purportedly waived by the prenuptial
agreement. Interestingly, the court, in dicta, stated that while the working spouse was still alive,
he possibly could have compelled execution of the REA waivers as required by the prenuptial
agreement. See also Manning v. Hayes, 212 F.3d 866, 870 (5th Cir. 2000), cert. denied, 532
U.S. 941 (2001).
In Hamilton v. Washington State Plumbing & Pipefitting Industry Pension Plan (2006,
CA 9) 2006 WL 44305, the participant divorced his first wife, Linda, in 1996. The dissolution
decree required that the participant name his children as beneficiaries of his pension. After the
divorce, the participant married his second wife, Mary. The participant died in 2002. Under the
terms of the plan, Mary was to receive the entire benefit in the event of death before retirement.
She asserted this right under the terms of the plan. The children asserted that the 1996 marital
dissolution order was a QDRO and that they should receive the benefits. The Ninth Circuit
Copyright 2013, Gair B. Petrie - 53 -
determined that the prior order was a QDRO. However, the Ninth Circuit also found that the plan
spousal rights were based on ERISA §205(a)(2) and superseded the QDRO.
In the context of a prenuptial agreement in Washington state, the practitioner may wish to
consider (i) delineating what benefits will be considered community versus separate,
(ii) including a waiver by the future spouse of the participant’s separate property retirement
benefits in the context of a divorce, and (iii) requiring the future spouse to sign appropriate REA
documents to waive spousal death benefit rights and tying the waivers to some type of economic
sanction. Of course, the participant should be counseled that the provision in the agreement
requiring the future spouse to execute REA waivers may not be enforceable, and perhaps the
penalty for failure to waive the REA rights may likewise be unenforceable.
Private Letter Ruling 2002-15-061 (Jan. 16, 2002) permitted a postnuptial agreement
setting out the division of an IRA in the event of divorce. Importantly, there was no division or
distribution pursuant to the agreement unless and until divorce.
DAVENPORT V. DAVENPORT, 146 F. Supp. 2d 770 (M.D.N.C. 2001). In Davenport,
the participant and his spouse had been married seven years. The participant had
a sizeable account balance under a profit sharing plan. Prior to the participant’s
death, the couple separated and began the dissolution process. During this time,
the participant executed a new will, leaving his entire estate to his four children.
The participant did not change the beneficiary designation on his profit sharing
plan. As noted above, ERISA would have required the spouse to consent to such
a change. The participant committed suicide, the surviving spouse applied to the
plan administrator for benefits, and the plan administrator brought an action in
equity to have the benefits paid to the participant’s estate. The Unites States
District Court held that because the participant’s spouse was the designated
beneficiary and the participant had not named another beneficiary (nor had the
spouse consented to designation of another beneficiary), she was entitled to the
plan benefits.
Owens v. Automotive Machinists Pension Trust 2007 U.S. Dist. LEXIS 7797 (W.D.
Wash. 2007). This is a fascinating case arising in Washington State. Under evolving case law in
Washington State, non-spouse cohabitants can accrue community-like property which can be
divided in divorce and handled at death in the same manner as community property. This case
involved a couple who lived together for over 30 years and had two children together. The court
found that the pension was "community-like property" and issued a qualified domestic relations
order or "QDRO" requiring payment of a portion of the pension to the other cohabitant. The
trustees of the plan refused to recognize the Order on the basis that the couple were never legally
married and that to be a QDRO, the Order must relate to child support, alimony or marital
property rights. Also, the trustees objected on the basis that the alternate payee was not a spouse,
former spouse or child of the participant. The court held that the community-like property was a
"marital property right" under ERISA and could, therefore, be subject to a QDRO.
A 2007 Court of Appeals case dealt with a spousal waiver to a retirement plan account
contained in a prenuptial agreement. In this case, the account holder spouse committed suicide
after marriage, but before he had completed a beneficiary designation and obtained his new
Copyright 2013, Gair B. Petrie - 54 -
wife's waiver of ERISA's spousal protection. The prenuptial agreement clearly provided that the
wife had waived any rights under the plan. Both the United States District Court and Court of
Appeals found that (i) the waiver contained in the prenuptial agreement was not worth the paper
it was written on as it did not satisfy ERISA's spousal consent requirements (most notably that
the consent be obtained after marriage in the form provided by the plan) and (ii) the wife was not
in breach of the agreement as she had not been asked to sign a waiver and consent while the
husband was living. Greenbaum Dahl & McDonald PLLC v. Sandler, 2007 U.S. App. LEXIS
28823 (6th
Cir. 2007). There have been several cases in which a spouse who ends up as
beneficiary contrary to a previous prenuptial or separation agreement may in fact face a breach
of contract claim under state law. E.g., Alcorn v. Appleton, 2009 W.L. 2997730 (N.D. GA
2009); Robins v. Geisel, (D.N.J. 2009).
Carmona v. Carmona, (September 17, 2008 U.S.C.A. 9). This is a fascinating case.
Mr. Carmona retired and commenced taking a joint and survivor annuity from a pension
plan. The annuity provided for a payment of a certain amount to Mr. Carmona during his
lifetime with payments to continue to his then wife (“wife one”) following
Mr. Carmona’s death.
Mr. Carmona and wife one divorced. The divorce decree awarded Mr. Carmona his
entire interest in the defined benefit plan.
Mr. Carmona later remarried (“wife two”). When he attempted to convince the pension
plan administrator to change the survivor beneficiary to wife two, the plan administrator
refused.
The United States Court of Appeals held that wife one will continue as the survivor
beneficiary of the pension plan payment. The Court reasoned that she never waived her
right to survivorship benefits at the time payment began. The state divorce court’s later
order is therefore preempted by ERISA.
The Ninth Circuit Court of Appeals recently ruled that the spousal protection of ERISA
does not transfer from a §401(k) plan to an IRA. In this case, the decedent took distribution of a
§401(k) plan and rolled it into an IRA. The decedent designated his four adult children as the
IRA’s beneficiaries. Following the decedent’s death, the surviving spouse asserted that ERISA’s
protections should apply to the IRA because it emanated from a §401(k) plan. The lower court
granted summary judgment in favor of the decedent’s children and this was upheld by the Court
of Appeals. This decision is correct because ERISA does not provide the surviving spouse death
benefit protection until the death of the spouse. At that time, the plan in question must be an
ERISA plan for the protection to apply. Charles Schwab & Co. v. Chandler, 105 AFTR 2d,
2010-690.
§13.6 COMMUNITY PROPERTY
Retirement plan benefits are generally considered to accrue from day to day and year to
year until they finally ripen into vested and matured interests. In community property states the
benefits that accrue during marriage are community property. The courts treat such benefits as if
the benefits had been purchased by the employee out of earnings. Thus, such property is owned
Copyright 2013, Gair B. Petrie - 55 -
in separate and community proportions according to the character of the hypothetical earnings
used to make the “payments.” Harry M. Cross, The Community Property Law in Washington
(rev. 1985), 61 WASH. L. REV. 13, 29 (1986 )
Although IRAs may be classified as community property for state law purposes, I.R.C.
§408(g) requires that the income tax rules governing IRA distributions be applied without regard
to community property law. This requirement can create traps for the unwary. In Bunney v.
Commissioner, 114 T.C. No. 17 (2000), the husband, in the process of a divorce, had a portion of
his IRA distributed to the wife. The I.R.S. asserted that the sole means to divide an IRA in a
divorce is through I.R.C. §408(d), which requires a direct transfer from one spouse’s IRA to the
divorcing spouse’s IRA. Moreover, the I.R.S. asserted that because the husband was the account
holder, the husband was liable for income tax and a 10 percent penalty under I.R.C. §72 relative
to the IRA distribution to his ex-wife. The husband argued that the wife should be considered the
distributee for income tax purposes because she was receiving her community property interest
in the IRA. The Tax Court agreed with the I.R.S. and taxed the husband.
In Morris v. Commissioner, 83 T.C.M. (CCH) 1104 (2002), the Tax Court again ignored
community property laws by refusing to allow the I.R.S. to proceed against the non-account-
holder spouse with an income tax deficiency resulting from the account holder spouse’s
withdrawals from a community property IRA.
Tax-qualified retirement plan benefits may be awarded to a former spouse or children
pursuant to a qualified domestic relations order under I.R.C. §414(p). I.R.C. §402 specifically
provides that the income tax associated with a distribution to the ex-spouse under such an order
is allocated to the ex-spouse. What catches practitioners by surprise, however, is that
distributions pursuant to a qualified domestic relations order to anyone other than the ex-spouse
(i.e., children of the couple or death beneficiary of the ex-spouse) are fully taxable to the
participant.
As discussed below, the community property interest of the decedent nonworking spouse
in a tax-qualified retirement plan essentially disappears in the event that the nonworking spouse
predeceases the working spouse.
There have been other clashes between ERISA and state laws. The Washington Supreme
Court held that a statute revoking beneficiary designations upon divorce (RCW 11.07.010)
would apply to a §401(k) plan beneficiary designation. In re Estate of Egelhoff, 139 Wn.2d 557
(1998). However, the United States Supreme Court reversed this decision, stating that the
Washington statute is preempted by ERISA in the case of a §401(k) plan. Egelhoff v. Egelhoff,
532 U.S. 141, 121 S. Ct. 1322, 149 L. Ed. 2d 264 (2001). The United States Supreme Court
reversal calls into question another Washington case. In In re Estate of Gardner, 103 Wn. App.
557, 13 P.3d 655 (2000), the court reviewed a divorce decree under which the spouses divided
their property and waived all claims against each other. The husband died before changing the
beneficiary designation on his TIAA-CREF plan. To complicate matters, the husband had
remarried prior to his death. The plan administrator took the position that the second spouse was
entitled to her 50 percent interest under ERISA and the remaining 50 percent should pass to the
first spouse as per the beneficiary designation. The Washington Court of Appeals, citing Egelhoff
and RCW 11.07.010(2)(a), held that divorce revoked the beneficiary designation and held that
Copyright 2013, Gair B. Petrie - 56 -
the second spouse was to receive all of the benefits (50 percent under ERISA and 50 percent in
recognition of her community property).
The Texas Supreme Court has also not agreed with the Egelhoff result. In Keen v.
Weaver, 121 S.W.3d 721 (Tex.), cert. denied, 488 U.S. 1006 (2003), the plan participant and
wife were divorced, but the participant died without changing the beneficiary designation for
plan benefits, leaving his former wife as the primary beneficiary and his mother as the contingent
beneficiary. Texas had a "redesignation" statute similar to that at issue in the Egelhoff decision.
The Texas Supreme Court stated that although ERISA preempts the Texas redesignation statute,
federal common law principles would recognize the former spouse's voluntary and knowing
waiver of the plan's benefits. Not surprisingly, this was a five/four decision with the dissenters
believing that the former spouse should receive the benefits.
In yet another case indicating a strong trend in favor of ERISA preemption, the Fifth
Circuit Court of Appeals stated that in a simultaneous death setting, payment of benefits is
governed by ERISA, the plain meaning of the plan language, and beneficiary designation.
Tucker v. Shreveport Transit Mgmt, Inc., 226 F.3d 394 (5th Cir. 2000). In this case, the court
refused to take into consideration a “simultaneous death” provision in the decedent’s will as well
as Louisiana’s statute concerning presumed survivorship.
In a postnuptial agreement, husband and wife agreed to disposition of husband’s IRA in
the event of a divorce. The IRA was not currently segregated or divided in any way. The I.R.S.
concluded that this arrangement did not cause any form of deemed distribution or a prohibited
transaction within the meaning of I.R.C. §4975(c). Priv. Ltr. Rul. 2002-15-061 (Jan. 16, 2002).
If the nonworking spouse has a community property interest in the working spouse’s
accounts, consideration must be given to planning for the disposition of his or her interest.
Unfortunately, the extent to which the nonworking spouse may control the disposition of the
interest is unclear. Most community property states regard the nonworking spouse as having a
community property interest in the working spouse’s retirement plans to the extent the benefits
accrued during marriage. The same is true of IRAs. The community property states that have
addressed the issue allow the nonworking spouse to dispose of that interest by will if he or she
predeceases the working spouse. In re Estate of Mundell, 124 Idaho 152, 857 P.2d 631 (1993);
In re Estate of MacDonald, 51 Cal. 3d 262, 794 P.2d 911 (1990); Allard v. Frech, 754 S.W.2d
111 (Tex. 1988), cert. denied, 488 U.S. 1006 (1989); Farver v. Dep’t of Retirement Sys., 97
Wn.2d 344, 644 P.2d 1149 (1982).
Although the state courts have generally recognized that the nonworking spouse has a
community property interest in the portion of a qualified plan that accrues during marriage, the
United States Supreme Court has held that the anti-alienation provisions of ERISA prevent the
nonworking spouse from disposing of his or her interest with respect to qualified plans. In Boggs
v. Boggs, 520 U.S. 833, 117 S. Ct. 1754, 138 L. Ed. 2d 45 (1996), the Supreme Court essentially
followed the logic of and came to the same conclusion as the Ninth Circuit Court of Appeals in
Ablamis v. Roper, 937 F.2d 1450 (9th Cir. 1991). Thus, although the nonworking spouse may
have a community property interest in a retirement plan during his or her nonworking spouse’s
lifetime, that interest is inaccessible following his or her death. Like the Ablamis decision, the
Boggs decision significantly impacts planning in a community property jurisdiction. For
Copyright 2013, Gair B. Petrie - 57 -
example, if the couple wishes to have the entire community property of the first spouse to die
pass into trusts for the benefit of the surviving spouse, that wish could be carried out relative to
the retirement plan if the working spouse dies first. However, if the nonworking spouse dies first,
the working spouse could assert the Boggs decision to prevent the deceased nonworking spouse’s
interest from being awarded to a trust under the deceased nonworking spouse’s will. In such a
case, could the estate of the nonworking spouse obtain some sort of “charging order” against the
surviving working spouse’s interest in the couple’s community property? Or, would such a
charging order likewise be preempted by ERISA and the Boggs decision?
A charging order would likely be unobtainable. The Boggs decision denied both access to
the retirement plan benefits and an “accounting” from other assets. Moreover, the United States
Supreme Court, in Yiatchos v. Yiatchos, 376 U.S. 306, 84 S. Ct. 742, 11 L. Ed. 2d 724 (1964),
held that relative to United States Savings Bonds, federal law prevails over inconsistent state
law. In Yiatchos, the heirs attempted to preclude a surviving joint tenant from taking United
States Savings Bonds and, in the alternative, argued for a charging order against other assets. The
Supreme Court made quick work of both arguments and stated that awarding the joint tenancy
assets to the co-owner but requiring the co-owner to account for one-half of the value of those
assets would render the federal law and award of title meaningless.
The Boggs decision could prevent the nonworking spouse from making full use of his or
her unified credit. In particular, the rule may prevent a nonworking spouse who owns few assets
(other than a retirement plan account) from sheltering enough other assets from inclusion in the
estate of the working spouse. As a result, the estate of the surviving spouse may be required to
pay a larger estate tax than otherwise. A planning approach might be an agreement prior to death
for a division of the former community property on an “aggregate” approach. The same result
could be obtained after death in states permitting non-pro rata divisions of the former community
property. Query: Would the I.R.S. use the Boggs rule to assert that such a division results in a
gift by the surviving working spouse?
Existing law appears to recognize that the nonworking spouse has much more control
over the disposition of his or her community property interest in an IRA. See RCW 6.15.020.
This statute states that the nonworking spouse's community property interest in the working
spouse's IRA may pass under the nonworking spouse's will. How the interest would actually be
disposed of to someone other than the working spouse is a difficult question.
In Private Letter Ruling 94-39-020 (July 7, 1994), the I.R.S. held that an IRA can be
partitioned (within one IRA account) into equally owned units without adverse tax effects. It
held that the partition of a community property IRA into separate equal shares owned and subject
to disposition by each spouse (but held within the working spouse’s IRA) was not a taxable event
and did not constitute a transfer or distribution for purposes of I.R.C. §408(d)(1). In such a case
the nonworking spouse could dispose of his or her interest in the IRA in a way that shelters it
from inclusion in the working spouse’s estate. This possibility should be explored in connection
with planning for large estates. The Service also held that such a partition did not involve any
gift by either spouse. It should be noted that an actual transfer of one spouse’s IRA into an IRA
in the name of the other spouse is, absent a divorce, a taxable distribution to the account holder
spouse. See Rodoni v. Commissioner, 105 T.C. 29 (1995).
Copyright 2013, Gair B. Petrie - 58 -
In an earlier Private Letter Ruling, the I.R.S. held that a predeceasing spouse may dispose
of his or her community property interest in an IRA. Priv. Ltr. Rul. 80-40-101 (July 15, 1980). In
this ruling the I.R.S. allowed the nonworking spouse’s community property interest in the
working spouse’s rollover IRA to be distributed pursuant to the will of the nonworking spouse. It
further determined that the distribution would not be taxed to the surviving working spouse.
Rather, the benefits were taxable to the individuals who received them. The I.R.S. also
concluded that the custodian of the IRA could recognize the probate court’s order to distribute to
the beneficiaries of the nonworking spouse’s will. The above result may no longer be valid after
the Tax Court’s decisions in Bunney and Morris.
In light of Private Letter Rulings 1999 -25-033 (June 25, 1999) and 1999-12-040 (Dec.
29, 1998), the disclaimer approach may be the best option for “funding” the credit shelter trust
upon the death of the nonworking spouse. Preparation for such funding would be as follows: (1)
the surviving spouse should be named as sole personal representative of the will and given broad
non-pro rata division and distribution powers, (2) the will should specifically provide that the
deceased spouse’s interest in the surviving spouse’s IRA will pass to the surviving spouse, but if
the surviving spouse disclaims, the disclaimed interest will pass to the estate, and (3) the will
should provide that, to the extent possible, the decedent’s interest in the surviving spouse’s IRA
will be allocated to the surviving spouse in any non-pro rata distribution. After death, the amount
necessary to fully fund the credit shelter trust could be disclaimed and then allocated back to the
surviving spouse in a non-pro rata distribution in exchange for the surviving spouse’s community
interest in non-IRA assets. If the I.R.S. does not change the approach it took under the above
Private Letter Rulings, it is likely that the non-pro rata distribution will not accelerate income.
Moreover, it appears that the I.R.S. does not take issue with the non-pro rata distribution by the
surviving spouse in his or her capacity as personal representative following a disclaimer by the
surviving spouse in his or her capacity as an heir of the estate. See Priv. Ltr. Rul. 97-07-008
(Nov. 12, 1996).
§13.7 CREDITORS’ CLAIMS
ERISA protects retirement plan accounts from creditors even if bankruptcy is not filed.
Patterson v. Schumate, 504 U.S. 753, 112 S. Ct. 932, 117 L. Ed. 2d 104 (1992); Barkley v.
Conner (In re Conner), 73 F.3d 258 (9th Cir.), cert. denied, 519 U.S. 817 (1996). IRAs enjoy
creditor protection outside bankruptcy only as provided by state law. See RCW 6.15.020.
It should be noted that ERISA protection does not apply if the retirement plan is
sponsored by an employer and the only participants in the plan are the husband and wife who
own the employer. Gill v. Stern (In re Stern), 345 F.3d 1036 (9th Cir. 2003), cert. denied, 541
U.S. 936 (2004). In other words, the plan must have a participant other than the husband and
wife who own the business. The time of this participation is measured at the time the creditor
asserts the claim. Id. Interestingly, it appears that a debtor could transfer from a nonexempt
retirement plan to a fully exempt retirement plan without the transaction being considered a
fraudulent conveyance under the bankruptcy rules. Id. Thus, for example, an owner of a
business who is facing severe creditor trouble could either (i) hire an employee who immediately
participates in the plan or (ii) the owner himself could take a job with another employer that has
participant employees and transfer his benefits to that employer’s plan.
Copyright 2013, Gair B. Petrie - 59 -
Both IRAs and retirement plans are protected in bankruptcy. The BANKRUPTCY ABUSE
PREVENTION AND CONSUMER PROTECTION ACT OF 2005, Pub. L. 109-8, 119 Stat. 23 (2005),
made key changes made to a debtor’s ability to exempt IRAs and certain tax-qualified retirement
plans in bankruptcy.
To understand the changes, it is helpful to review the prior bankruptcy scheme. The
ability of a debtor to exempt assets from creditors’ claims in a bankruptcy proceeding is
governed by 11 U.S.C. §522. For ease of reference, we will refer to this statute in its pre-
amendment form as the “prior law”. Under the prior law, the debtor was permitted to elect either
a list of federal exemptions or the exemptions provided by applicable state law. The debtor
could not pick and choose from the two groups of exemptions. Of course, either way, qualified
retirement plans governed by ERISA were exempt by virtue of ERISA. Patterson v. Schumate,
504 U.S. 753. However, as discussed above, it is possible for a qualified retirement plan to lack
ERISA protection. With respect to a debtor’s IRA (and a qualified plan not covered by ERISA),
the decision to elect federal or state exemptions was critical. A debtor who elected the
Washington state exemptions would rely on RCW 6.15.020, which exempts IRAs and many non-
ERISA plans from creditors’ claims. RCW 6.15.020. This exemption is unlimited. If federal
exemptions were elected, the prior law stated as follows:
A payment under a stock bonus, pension, profit sharing, annuity or similar plan or
contract on account of illness, disability, death, age, or length of service, to the
extent reasonably necessary for the support of the debtor and any dependent of
the debtor . . . (Emphasis added.)
Former 11 U.S.C. §522(d).
Under the prior law, there was a question as to whether the federal exemption applied to
IRAs at all. This issue was settled by the Supreme Court in Rousey v. Jacoway, ___ U.S. ___,
125 S. Ct. 1561, 161 L. Ed. 2d 563, 73 U.S.L.W. 4277 (2005) In the Rousey case, the debtor
elected the federal exemptions. The Court held that the above quoted section of the prior law
applies to IRAs, but only permitted the debtors to exempt that which was reasonably necessary
for their support. Had the Rousey bankruptcy occurred in the state of Washington and the state
exemptions been elected, the debtor’s entire IRA would have been exempt.
Section 224 of Pub. L. 109-8 substantially changes 11 U.S.C. §522 with respect to its
treatment of IRAs and qualified plans not covered by ERISA. This “new law” includes the
following provisions:
• If the debtor elects state exemptions, IRAs and qualified plans not covered by
ERISA have exempt status unless applicable state law specifically states
otherwise. Therefore, for a Washington resident electing the state exemptions,
RCW 6.15.020 along with the new law will exempt the IRA subject only to a
dollar limit that has a very narrow application, discussed below.
• If the debtor elects the federal list of exemptions under the new law, there is now
a specific exemption for IRA and tax-qualified non-ERISA plans. This
exemption is not subject to the “reasonably necessary for support” test of the prior
Copyright 2013, Gair B. Petrie - 60 -
law. 11 U.S.C.A. 522(d)(12). This exemption is also subject to a very narrowly
worded limit, described below.
• The new law includes a limit for the dollar amount of an IRA that may be exempt.
11 U.S.C.A. 522(n). This dollar limit applies whether the debtor elects state or
federal exemptions. Thus, this dollar limit theoretically could limit application of
RCW 6.15.020 when a Washington resident has elected state exemptions. The
limit is $1 million; however,
1) Amounts in an IRA attributable to a rollover from a qualified plan
are not taken into account in the $1 million limit. This means that the $1 million
limit really only applies to traditional annual IRA contributions and earnings
thereon.
2) The $1 million exemption limit does not apply to a SEP (simplified
employee pension) account or a SIMPLE retirement account. This makes sense
as these are employer-sponsored IRAs similar to 401(k) plans.
Comment: The law is good news for debtors. It is now clear that IRAs may be protected
under both the federal and applicable state exemptions. Because the $1 million
limit does not apply to rollover contributions, it is advisable to keep rollover IRAs
separate from an IRA funded by annual contributions. The new law really does
not affect the treatment of accounts in a tax-qualified retirement plan that is fully
covered by ERISA. As mentioned above, ERISA provides the exemption for
these accounts. However, the new law improves the protection for an account in
a tax-qualified plan that is not covered by ERISA, such as the §401(k) plan in the
In Re Stern case described above. Under the prior law, such an account was only
protected if the debtor elected state exemptions and the state exemptions provided
protection for such an account. Under the new law, as long as the arrangement is
tax-qualified, the federal exemptions provide protection.
In the context of a bankrupt individual with an interest in a qualified retirement plan, the
creditors may have the incentive to look for problems with plan language or administration
leading to plan disqualification. The IRS has a program to retroactively correct qualification
defects as “EPCRS” under Rev. Proc. 2008-50. A bankruptcy court should honor such a
retroactive correction.
Another area of concern involves IRAs. Under IRC §408(e)(2), an IRA will lose its tax
qualified status in the year a prohibited transaction under IRC §4975 occurs with respect to the
IRA. In In Re Ernst W. Willis, 104 AFTR. 2d 2009-5195, the creditors asserted the existence of
prohibited transactions with regard to the debtor’s IRA in order to defeat creditor protection and
obtain access to the IRA. There is no IRS correction program for IRA prohibited transactions.
See the discussion below concerning inherited IRAs and creditor protection.
See the discussion under “Inherited IRAs” below concerning creditor protection for
Inherited IRAs.
Copyright 2013, Gair B. Petrie - 61 -
§13.8 INHERITED IRA
• What is an inherited IRA?
An inherited IRA is an IRA received by a beneficiary of a deceased account holder. As
discussed below, the decedent may have left an IRA to said beneficiary or a retirement plan
account to said beneficiary which retirement plan account is transferred to the inherited IRA by
way of a "non-spouse rollover" under IRC §402(c)(11).
If the decedent's surviving spouse is the beneficiary of the decedent's IRA; then, until the
surviving spouse completes a spousal rollover into an IRA in the name of the surviving spouse,
the decedent's IRA is technically an inherited IRA with regard to the surviving spouse.
However, once the surviving spouse rolls the decedent's IRA into an IRA in the surviving
spouse's name, the surviving spouse becomes the account holder with respect to said IRA and
said rollover IRA is not an inherited IRA.
• How are inherited IRAs created?
An inherited IRA may emanate from a decedent's IRA as follows: The account holder of
an IRA dies designating a beneficiary of his or her IRA. Assuming the beneficiary is not the
surviving spouse (so that there will be no spousal rollover), the IRA will now be registered in the
decedent's name for the benefit of ("f/b/o") the non-spouse beneficiary. If the deceased account
holder named several beneficiaries, the IRA may be divided in compliance with required
minimum distribution ("RMD") rules into separate f/b/o accounts; each in the name of the
decedent f/b/o a specified beneficiary.
Example:
Sally Smith dies in 2007 at age 72 with her three children designated as beneficiaries of
her IRA. Sally's three children make sure that her 2007 RMD is taken before December 31,
2007. Sally's children thereafter direct the custodian of the IRA to divide Sally's IRA by way of
direct IRA-to-IRA transfers into three new IRAs; each in the name of Sally, deceased f/b/o a
specific child. Each of these three IRAs are inherited IRAs which will be treated as separate
IRAs for RMD purposes under Reg. 1.401(a)(9)-8, QA2.
Example:
Fred dies designating his wife, Sue, as beneficiary of his IRA. Sue is only 55 years of
age and fears she may need distributions from Fred's IRA to live on. Sue is advised that
distributions taken from an inherited IRA are exempt from the 10% penalty of Section 72(t) so
she leaves the IRA registered in Fred's name f/b/o Sue. While the IRA is so registered, it is an
inherited IRA with regard to Sue. After attaining age 59½ (when Sue would no longer be subject
to the premature distribution penalty of IRC §72(t)), Sue rolls Fred's IRA into an IRA in Sue's
name. Sue's rollover IRA is not an inherited IRA. It is a rollover IRA of which Sue is the
account holder having all rights of an account holder (e.g., Sue can delay commencing RMDs
until April 1 of the calendar year following the calendar year Sue attains age 70½, Sue may
convert the IRA to a Roth IRA, Sue may designate beneficiaries whose life expectancies will be
utilized for a stretch out distribution following Sue's death under the RMD rules).
Copyright 2013, Gair B. Petrie - 62 -
The second way that an inherited IRA may be created is by way of a "non-spouse
rollover" under IRC §402(c)(11). Under this new Code section, if the retirement plan so allows,
a non-spouse beneficiary may direct the administrator of the decedent's retirement plan to
transfer the decedent's account to an inherited IRA. This is different than the spousal rollover
option. If an account holder in a retirement plan dies designating the spouse as beneficiary, the
spouse has the right to take distribution of the decedent's account and roll it into an IRA in the
spouse's name. Again, the spousal rollover IRA is not an inherited IRA. Rather, the spouse will
be the account holder with respect to the IRA. Section 402(c)(11) allows a non-spouse
beneficiary to have the decedent's account in a retirement plan transferred to an inherited IRA.
Example:
Bill dies in 2007 designating his daughter, Kate, as beneficiary of a §401(k) plan account.
The plan in question permits a non-spouse rollover. Kate may direct the plan to make a direct
plan-to-IRA transfer of Bill's account to an IRA in Bill's name, deceased f/b/o Kate (an inherited
IRA). This direct transfer may occur in one of two ways. The funds could be directly
transferred from the §401(k) plan account to the inherited IRA account. Or, a check in the name
of the IRA custodian may be issued to Kate which Kate takes to the IRA custodian. However,
the §401(k) plan may not issue the check in Kate's name. Section 402(c)(11)(A).
• How are RMDs calculated from an inherited IRA?
A discussion of the RMD rules can be found at Section 1.2(1), above. However, for
purposes of this section, let's assume that there is one individual beneficiary or that the separate
account rules of Reg. 1.401(a)(9)-8 have been complied with so that, for RMD purposes, each
beneficiary would be treated separately. Finally, because special rules apply to a surviving
spouse (a spousal rollover opportunity and the ability to delay RMDs) the following assume an
individual non-spouse beneficiary. Initially, if the decedent was already beyond his or her
required beginning date, the beneficiaries must make certain that the decedent's RMD for the
year of death is made. Reg. 1.401(a)(9)-5, QA4. Unless the "five-year rule" (described below)
applies, a non-spouse recipient of an inherited IRA must begin RMDs no later than the end of the
calendar year following the account holder's death.
Example:
Betty dies in 2007 at age 75 after taking her 2007 RMD naming her daughter, Shirley, as
beneficiary. Shirley's first RMD is due December 31, 2008 and will be computed with reference
to the December 31, 2007 IRA account balance. For her 2008 RMD, Shirley will divide said
account balance by her life expectancy under the single life table ("SLT") of Reg. 1.401(a)(9)-9,
QA1 based on Shirley's attained age in 2008. This process repeats each calendar year by
reducing Shirley's initial divisor by one. In short, the table is only consulted in the first year
(2008) as the divisor, once established in 2008, reduces by one for each year thereafter. This
method is known as a "stretch out".
If the account holder dies before his or her required beginning date, there is the
possibility that the five-year rule may apply. This rule requires that the account be completely
distributed by the end of the calendar year containing the fifth anniversary of the participant's
Copyright 2013, Gair B. Petrie - 63 -
death. Reg. 1.401(a)(9)-3A(b), QA2. Generally speaking, the five-year rule is not a concern
where the decedent's account was in an IRA. However, it is not uncommon for retirement plans
to employ the five-year rule. For example, a §401(k) plan might require that a non-spouse
beneficiary receive complete distribution within five years of the decedent's death. The
beneficiary may nonetheless escape the five-year rule, if (i) the plan permits a non-spouse
rollover and (ii) the beneficiary completes the non-spouse rollover before the end of the calendar
year following the calendar year of the participant's death. Notice 2007-7, QA17(c)(2) and IRS
clarification by newsletter dated February 13, 2007.
Example:
Fred dies at age 60 leaving his §401(k) plan account to his daughter, Pebbles. The
§401(k) plan permits non-spouse rollovers but also states that non-spouse beneficiaries must
complete distribution within five years of death. If Pebbles completes a non-spouse rollover
before the end of the year following Fred's death, the five-year rule will not apply to her inherited
IRA. Instead, Pebbles will obtain the "stretch out" described above. Note, if Pebbles completes
the non-spouse rollover in the year after Fred's death, her RMD for such year may not be
transferred to the inherited IRA.
• What about trusts as beneficiaries?
If a decedent dies naming a trust as beneficiary of an IRA, complicated rules apply in
determining RMDs applicable to the trust (see §13.2(1)(i), above. Said IRA will be an inherited
IRA in the name of the decedent f/b/o the trust. Moreover, if the decedent of a retirement plan
account dies naming a trust as beneficiary, the trustee could direct the retirement plan to transfer
the account directly to an inherited IRA if (i) the plan so allows and (ii) the trust is a qualified
trust under the RMD rules. Notice 2007-7.
• What key rights does a beneficiary of an inherited IRA have?
• The beneficiary may take as little as the required RMD each year or additional
amounts as permitted by the applicable IRA custodial account agreement.
• If the beneficiary wishes to move the IRA from one custodian to another, he or
she may do so by way of a direct IRA-to-IRA transfer. Section 402(c)(11).
• As part of his or her estate plan, the beneficiary may designate who will receive
the balance of the inherited IRA upon the beneficiary's death. This beneficiary
designation does not affect the calculation of RMDs following the beneficiary's
death. Thus, for example, if the beneficiary of an inherited IRA dies naming a
trust as his or her successor, the trustee will be required to continue the RMD
calculation as was formerly utilized by the beneficiary.
• The beneficiary of an inherited IRA may take distributions before he or she
attains age 59½ free of the 10% penalty of IRC §72(t).
Copyright 2013, Gair B. Petrie - 64 -
• The beneficiary of an inherited IRA may deduct from his or her income tax
liability associated with IRA withdrawals the estate tax attributable to such IRA
under IRC §691(c).
• In the process of a non-spouse rollover from a qualified plan, the beneficiary can
convert the account to a Roth under the rules described at Section 1.2(4), above.
• What rights does a beneficiary of an inherited IRA not have?
• The beneficiary of an inherited IRA may not consolidate said IRA with an IRA of
which the beneficiary is an account holder.
• The beneficiary of an inherited IRA may not make pre-tax or after tax
contributions to the inherited IRA.
• A non-spouse beneficiary may not receive a distribution in the beneficiary's name
and then roll the distribution to another IRA. This could be accomplished,
however, by way of an IRA-to-IRA direct transfer.
• The beneficiary may not roll an inherited IRA into a retirement plan account in
the beneficiary's name.
• Under current law, an inherited IRA cannot be converted to a Roth IRA.
As mentioned above, if a surviving spouse is the beneficiary of an IRA, until such IRA is
rolled over into an IRA in the spouse's name, the IRA is an inherited IRA in the hands of the
surviving spouse. Under IRC §408 and §402, a surviving spouse may take a distribution of the
IRA and roll it into an IRA in his or her name. Thereafter, the rollover IRA is no longer an
inherited IRA but an IRA of which the spouse is the account holder for all purposes.
• Creditor protection of an inherited IRA.
Whether an inherited IRA is entitled to creditor protection is an issue “in process”. For
debtors asserting the federal bankruptcy exemptions, there are two conflicting rulings. In the
case of In re Chilton, (Bankr. Ct, TX 35 2010), the Bankruptcy Court found that inherited IRAs
are not entitled to federal bankruptcy protection. This decision was reversed (thankfully) by the
Fifth Circuit. In re Chilton (5th
Cir. 2012). A United States Bankruptcy Court in the District of
Minnesota agreed that Inherited IRAs are protected. In re Nessa, (Bankr. Ct. Minn. 2010).
As to the application of state protective statutes (where the state exemptions are elected in
the bankruptcy), there have been several cases (Alabama, California, Illinois, Oklahoma, Texas
and Wisconsin) where protection has been denied. For a discussion of these cases, see “Are
Inherited IRAs Protected Under a State Exemption Statute?” Steve Leimberg’s Employee
Benefits and Retirement Planning Email Newsletter – Archive Message No. 427.
In In re McClelland, 2008 W.L. 89901 (Bankr. D. Idaho), the court allowed protection
for an inherited IRA under Idaho’s statute. Here in Washington state, RCW 6.15.020 is very
Copyright 2013, Gair B. Petrie - 65 -
broadly written (and very similar to the Idaho statute) so that absent a “result oriented decision”
the correct answer should favor exemption of an inherited IRA under said statute.
As a result of all of this, if the account holder is very worried about creditor protection for
his beneficiaries, a trust as beneficiary (as opposed to the beneficiaries outright) should be
considered.
Copyright 2013, Gair B. Petrie - 66 -
Appendices
§13.22. Appendix A Beneficiary Designation Agreement - Surviving Spouse Naming
Multiple Children
§13.23. Appendix A-1 Primary Beneficiary: Surviving Spouse – Secondary Beneficiary:
Children
§13.24. Appendix B Revocable Living Trust Provisions (Non-Pro Rata Powers)
§13.25. Appendix C Beneficiary Designation
§13.26. Appendix D Will Provisions (Non-Pro Rata Powers)
§13.27. Appendix E Sample QTIP Beneficiary Designation Agreement
§13.28. Appendix F Sample IRA QTIP Trust Provisions (Non “Safe Harbor”)
§13.29. Appendix G Specific Bequest of Non-Working Spouse’s Community Interest
§13.30. Appendix H Will Provisions – Miscellaneous Retirement Plan IRA Matters
§13.31. Appendix I Life Expectancy and Distribution Period Tables
The author expresses no legal, tax, or other opinions herein or with regard to the forms
appearing as appendices (or any other forms attached to this Article). Also, the author takes
no responsibility for misstatements or errors that may appear herein as these materials cannot
be relied upon as research materials. The following should only be used upon a thorough
review of the client’s facts and applicable law. Moreover, the reproduction of
Reg. 1.401(a)(9)-9 appearing at Appendix I is for illustrative purposes only and, due to
possible updates and computer glitches, only the actual regulation from a service publishing
the same should be used to make a calculation
Copyright 2013, Gair B. Petrie - 67 -
§13.22. Appendix A—Beneficiary Designation Agreement – Surviving Spouse Naming
Multiple Children
IRA BENEFICIARY DESIGNATION AGREEMENT
The undersigned "IRA Custodian" (_____________________) and the undersigned
"Participant" (___________________________) do hereby agree as follows with respect to the
IRA Custodial ("Account") maintained by the IRA Custodian on behalf of the Participant:
1. Primary Beneficiaries. The Primary Beneficiaries of the Participant’s Account and
their respective shares for purposes of Section 2 herein, shall be as follows:
Beneficiary Social Security Number Percentage
%
%
%
%
2. Separate IRAs. The Participant’s Account shall be divided into separate IRAs for
the Primary Beneficiaries with each said Primary Beneficiary’s IRA to have allocated to it the
percentage of the Participant’s Account designated above. If a Primary Beneficiary fails to
survive the Participant but leaves at least one lineal descendant who survives the Participant, said
Primary Beneficiary’s IRA shall be further divided, per stirpes, into separate IRAs for said
deceased Primary Beneficiary’s lineal descendants who survive the Participant (who shall be
considered Primary Beneficiaries hereunder); or, if the deceased Primary Beneficiary leaves no
lineal descendant surviving the Participant, the percentage of the Participant’s Account as
designated under Section 1 for the deceased Primary Beneficiary shall be added, pro rata, to the
other separate IRAs created hereunder. The identity of the Primary Beneficiaries under this
Beneficiary Designation and the shares used to establish each of their separate IRAs under this
Section 2, shall be provided to the Custodian by the Personal Representative of the Participant’s
estate as soon as practicable following the Participant’s death and the Custodian shall have no
liability whatsoever with regard to said division. Said division shall occur as soon as practicable
following the death of the Participant and shall be effective upon the death of the Participant.
3. Separate IRAs. Each Primary Beneficiary’s separate IRA under Section 2 shall be
and remain a separate IRA in the name of the deceased Participant (F/B/O the Primary
Beneficiary). Each separate IRA shall thereafter be paid to its respective Primary Beneficiary in
annual payments equal to the required minimum distribution under IRC §401(a)(9) to be initiated
and calculated by the Primary Beneficiary; provided, however, that at any time or times
requested by the Primary Beneficiary, the Custodian shall distribute to said Primary Beneficiary,
from his or her separate IRA, such amount as said Primary Beneficiary may request in writing.
Upon written request by the Primary Beneficiary of a separate IRA hereunder, the Custodian
Copyright 2013, Gair B. Petrie - 68 -
shall transfer said Primary Beneficiary's separate IRA to such other trust or custodial account
specified by said Primary Beneficiary; provided that the transferee account is an IRA under IRC
§408. Each Primary Beneficiary shall have the power to determine the investment of his or her
separate IRA. In the event a Primary Beneficiary of a separate IRA dies before his or her IRA
has been distributed to said deceased Primary Beneficiary, the remaining assets in said IRA of
said deceased Primary Beneficiary shall be divided into separate IRAs for the beneficiary or
beneficiaries designated by said deceased Primary Beneficiary on a form reasonably acceptable
to the Custodian; or, to the extent a beneficiary has not been so designated, the deceased Primary
Beneficiary’s IRA shall be divided, per stirpes, into separate IRAs for the lineal descendants of
the deceased Primary Beneficiary who survive said Primary Beneficiary or, if none, per stirpes
for the then living lineal descendants of the Participant, the identity of whom and shares of which
the Personal Representative of the deceased Primary Beneficiary’s estate shall provide to the
Custodian. Distributions from an IRA created for a beneficiary of a deceased Primary
Beneficiary shall occur as required by IRC §401(a)(9) and shall be calculated and initiated by
said beneficiary. Moreover, said beneficiary shall, with respect to his or her IRA, have all rights
of a Primary Beneficiary described above relative to additional withdrawals, transfer and
investment control.
4. Miscellaneous. By entering into this Beneficiary Designation Agreement, the IRA
Custodian does hereby acknowledge and agree that:
(a) No Required Distributions Other than Minimum Distributions. Other than
the minimum distributions required by law, neither the Participant nor any beneficiary
shall be required to take any distribution at any time.
(b) Responsibility for Minimum Distributions. Any minimum distribution
shall be initiated and calculated by the Participant while living and, after the Participant's
death, the beneficiary with respect to his or her separate IRA. The Custodian shall be
under no obligation to initiate or calculate any minimum distribution.
(c) Modification of IRA Trust. By its acceptance of this Beneficiary
Designation Agreement, the Custodian agrees that its printed IRA Agreement is amended
so that the provisions of this Beneficiary Designation Agreement shall control in the
event of any difference or conflict between this Beneficiary Designation Agreement and
the terms of the printed IRA Agreement. Accordingly, this Beneficiary Designation
Agreement amends the printed IRA Agreement to include provisions not otherwise in the
printed IRA Agreement and to supersede and replace any provisions otherwise
inconsistent with the provisions of this Beneficiary Designation Agreement; provided,
however, that nothing herein that would be contrary to the requirements of IRC §408 or
§401(a)(9) relative to an individual retirement account and distributions therefrom shall
be effective.
(d) Agreement Revocable. This Beneficiary Designation Agreement may be
altered, changed or revoked during the Participant's lifetime. Upon the Participant's death,
this Beneficiary Designation Agreement shall become irrevocable.
Copyright 2013, Gair B. Petrie - 69 -
DATED this ___ day of _______________, 20___.
Participant:
IRA Custodian:
By:
Its:
Copyright 2013, Gair B. Petrie - 70 -
§13.23. Appendix A-1—Primary Beneficiary: Surviving Spouse—Secondary Beneficiary:
Children
BENEFICIARY DESIGNATION
The undersigned “IRA Custodian” (____________________________) and the
undersigned “ Participant” ______________________________ do hereby agree as follows with
respect to the IRA Custodial (“Account”) maintained by the IRA Custodian on behalf of the
Participant:
1. Primary Beneficiary. If _________________________ (spouse) survives the
Participant, the beneficiary of the Account shall be ______________________.
_______________________ may roll over all or any portion of the Account payable to her
hereunder into an IRA in _________________________’s name, whether or not the custodian or
trustee of the recipient IRA is the IRA Custodian hereunder. The IRA Custodian shall fully
cooperate with _________________________ with regard to such a rollover.
2. Contingent Beneficiaries. In the event _________________________ does not
survive the Participant, the Secondary Beneficiaries of the Participant’s Account and their
respective shares for purposes of Section 2.a herein, shall be as follows:
Beneficiary Percentage
_________________________ ___%
_________________________ ___%
a. Separate IRAs. The Participant’s Account shall be divided into separate
IRAs for the Secondary Beneficiaries with each said Secondary Beneficiary’s IRA to
have allocated to it the percentage of the Participant’s Account designated above. If a
Secondary Beneficiary fails to survive the Participant but leaves at least one lineal
descendant who survives the Participant, said Secondary Beneficiary’s IRA shall be
further divided, per stirpes, into separate IRAs for said deceased Secondary Beneficiary’s
lineal descendants who survive the Participant (who shall be considered Secondary
Beneficiaries hereunder); or, if the deceased Secondary Beneficiary leaves no lineal
descendant surviving the Participant, the percentage of the Participant’s Account as
designated under this section for the deceased Secondary Beneficiary shall be added, pro
rata, to the other separate IRAs created hereunder. The identity of the Secondary
Beneficiaries under this Beneficiary Designation and the shares used to establish each of
their separate IRAs under this section shall be provided to the Custodian by the Personal
Representative of the Participant’s estate as soon as practicable following the
Participant’s death and the Custodian shall have no liability whatsoever with regard to
said division. Said division shall occur as soon as practicable following the death of the
Participant and shall be effective upon the death of the Participant.
b. Separate IRAs. Each Secondary Beneficiary’s separate IRA under this
section shall be and remain a separate IRA in the name of the deceased Participant
(F/B/O the Secondary Beneficiary). Each separate IRA shall thereafter be paid to its
Copyright 2013, Gair B. Petrie - 71 -
respective Secondary Beneficiary in annual payments equal to the required minimum
distribution under IRC §401(a)(9) to be initiated and calculated by the Secondary
Beneficiary; provided, however, that at any time or times requested by the Secondary
Beneficiary, the Custodian shall distribute to said Secondary Beneficiary, from his or her
separate IRA, such amount as said Secondary Beneficiary may request in writing. Upon
written request by the Secondary Beneficiary of a separate IRA hereunder, the Custodian
shall transfer said Secondary Beneficiary's separate IRA to such other trust or custodial
account specified by said Secondary Beneficiary; provided that the transferee account is
an IRA under IRC §408. Each Secondary Beneficiary shall have the power to determine
the investment of his or her separate IRA. In the event a Secondary Beneficiary of a
separate IRA dies before his or her IRA has been distributed to said deceased Secondary
Beneficiary, the remaining assets in said IRA of said deceased Secondary Beneficiary
shall be divided into separate IRAs for the beneficiary or beneficiaries designated by said
deceased Secondary Beneficiary on a form reasonably acceptable to the Custodian; or, to
the extent a beneficiary has not been so designated, the deceased Secondary Beneficiary’s
IRA shall be divided, per stirpes, into separate IRAs for the lineal descendants of the
deceased Secondary Beneficiary who survive said Secondary Beneficiary or, if none, per
stirpes for the then living lineal descendants of the Participant, the identity of whom and
shares of which the Personal Representative of the deceased Secondary Beneficiary’s
estate shall provide to the Custodian. Distributions from an IRA created for a beneficiary
of a deceased Secondary Beneficiary shall occur as required by IRC §401(a)(9) and shall
be calculated and initiated by said beneficiary. Moreover, said beneficiary shall, with
respect to his or her IRA, have all rights of a Secondary Beneficiary described above
relative to additional withdrawals, transfer and investment control.
3. Miscellaneous. By entering into this Beneficiary Designation Agreement, the IRA
Custodian does hereby acknowledge and agree that:
a. No Required Distributions Other than Minimum Distributions. Other than
the minimum distributions required by law, neither the Participant nor any beneficiary
shall be required to take any distribution at any time.
b. Responsibility for Minimum Distributions. Any minimum distribution
shall be initiated and calculated by the Participant while living and, after the Participant's
death, the beneficiary with respect to his or her separate IRA. The Custodian shall be
under no obligation to initiate or calculate any minimum distribution.
c. Modification of IRA Trust. By its acceptance of this Beneficiary
Designation Agreement, the Custodian agrees that its printed IRA Agreement is amended
so that the provisions of this Beneficiary Designation Agreement shall control in the
event of any difference or conflict between this Beneficiary Designation Agreement and
the terms of the printed IRA Agreement. Accordingly, this Beneficiary Designation
Agreement amends the printed IRA Agreement to include provisions not otherwise in the
printed IRA Agreement and to supersede and replace any provisions otherwise
inconsistent with the provisions of this Beneficiary Designation Agreement; provided,
however, that nothing herein that would be contrary to the requirements of IRC §408 or
Copyright 2013, Gair B. Petrie - 72 -
§401(a)(9) relative to an individual retirement account and distributions therefrom shall
be effective.
d. Agreement Revocable. This Beneficiary Designation Agreement may be
altered, changed or revoked during the Participant's lifetime. Upon the Participant's death,
this Beneficiary Designation Agreement shall become irrevocable.
Dated this _____ day of ______________________, 20___.
Participant:
Spouse:
IRA Custodian:
By:
Its:
Copyright 2013, Gair B. Petrie - 73 -
§13.23. Appendix A-2—Short Form Designations
BENEFICIARY DESIGNATION
• Primary Beneficiary. [Spouse]; provided, however, that any portion of the account
disclaimed by [spouse] shall pass to the [spouse] Trust under Article V of the Last Will of
______________________.
• Secondary Beneficiary. If [spouse] does not survive the account holder, the account shall
be divided into separate accounts; one for each child of the account holder's who survives
the account holder and one for each deceased child of the account holder's who leaves at
least one lineal descendant surviving the account holder. The separate accounts with
respect to a deceased child of the account holder's who leaves a lineal descendant
surviving the account holder shall be further divided, per stirpes, into separate accounts
for the descendants of the deceased child who survive the account holder. The separate
account of any descendant of a deceased child of the account holder's who is then under
thirty (30) years of age shall be payable to said descendant's trust under Article VI.B of
the Last Will of ______________________.
Copyright 2013, Gair B. Petrie - 74 -
§13.24. Appendix B—Revocable Living Trust Provisions (Non-Pro Rata Powers)
Division of Trust Property Upon Death of First Grantor. As soon as practicable after the
death of the first of the Grantors to die, the Trustee shall divide this Trust into two (2) separate
shares, one separate trust share to be designated the "Surviving Grantor's Trust", and the other
separate trust share to be designated the "Family Trust". The Surviving Grantor's Trust shall
consist of the surviving Grantor's community property and separate property interests held by
(or, as a result of the death of the deceased Grantor distributed to), this Trust and the surviving
Grantor's separate property interest held by this Trust. The Family Trust shall consist of the
deceased Grantor's community property and separate property interests held by (or, as a result of
the death of the deceased Grantor distributed to), this Trust.
Non-Pro Rata Division/Retirement Benefits. The Trustee (and the deceased Grantors’
Personal Representative) are fully and completely authorized to agree with the surviving Grantor
to make an approximately equal non-pro rata division of the Grantors’ former community
property (both probate and non-probate); provided, however, that property shall be exchanged as
its exchange date value. In making said non-pro rata division, the Grantors intend, to the
maximum extent possible, that any right to “Retirement Benefits” (individual retirement account,
annuity, bond or SEPP under IRC §408, a tax deferred annuity under IRC §403, or a retirement
plan under IRC §401) shall be allocated to the Surviving Grantor’s Trust. Notwithstanding any
other provision of this Trust to the contrary, the Surviving Grantor shall have the unilateral right
to withdraw, at any time, any right to a Retirement Benefit allocated to the Surviving Grantor’s
Trust under the sentence immediately preceding. In the event that, notwithstanding the
preceding, a right to a Retirement Benefit is allocated to the Family Trust, then, it is the
Grantor’s intent, that, to the maximum extent possible, the same be allocated to the portion of
said Family Trust for which a federal estate tax marital deduction is elected; provided, however,
immediately after said allocation, said right shall be distributed to the Surviving Grantor,
outright.
Retirement Benefits. Notwithstanding any other provision of this Trust, the Trustee may
not distribute to or for the benefit of either Grantor’s estate, any charity or any other non-
individual beneficiary any Retirement Benefits. It is the Grantor’s intent that all Retirement
Benefits be distributed to or held for only individual beneficiaries, within the meaning of Section
401(a)(9) and applicable regulations. Moreover, notwithstanding any other provision of this
Trust or state law, a person’s “lineal descendants” for purposes of this instrument shall not
include any individual who is a lineal descendant by virtue of legal adoption if such individual
(i) was adopted after the Grantor’s death and (ii) is older than the oldest beneficiary of this Trust
who is living on said date. Any power of appointment under a Trust hereunder shall not be
exercisable with respect to Retirement Benefits, to the extent the existence or exercise of said
power would result in the Trust failing to have “identifiable beneficiaries” for purposes of the
qualified Trust Rules of Treasury Regulation 1.401(a)(9)-4QA5 or to the extent the existence or
exercise of said power would result in the Trust being considered to have a beneficiary older than
the oldest beneficiary of this Trust who is living on the date specified above. [As an alternative,
this provision could specify that, to the extent a Trust becomes a beneficiary of a Retirement
Benefit, any withdrawals or distributions from the Plan or IRA will be distributed to the income
beneficiary. See Reg. §1.401(a)(9)-5QA7(c)(3)(Ex.2).]
Copyright 2013, Gair B. Petrie - 75 -
§13.25. Appendix C—Beneficiary Designation
Designation of Surviving Spouse (With Disclaimer Opportunity) and Contingent Beneficiary
“Safe Harbor” Trust for Children
The undersigned "IRA Custodian" (_____________________) and the undersigned
"Participant" (____________________) do hereby agree as follows with respect to the IRA
Custodial ("Account") maintained by the IRA Custodian on behalf of the Participant:
1. Primary Beneficiary. If _________________ survives the Participant, the
beneficiary of the Account shall be _________________; provided, however, that any portion of
the account disclaimed by her shall pass to the _________________ Family Trust.
2. Contingent Beneficiary. In the event _________________ does not survive the
Participant, the Account shall be divided into equal accounts: one account for each child of the
Participant’s who survives the Participant and one account for each child of the Participant’s who
fails to survive the Participant but who leaves at least one lineal descendant of his or hers
surviving the Participant. The account of a surviving child of the Participant’s shall be payable to
said child as provided herein. The account of a deceased child of the Participant’s who leaves at
least one lineal descendant surviving the Participant, shall be divided, per stirpes, into separate
accounts, for the descendants of said deceased child who survive the Participant and said
separate accounts shall be payable to the respective beneficiaries thereof as provided herein.
3. Additional Provisions. By entering into this Beneficiary Designation Agreement,
the IRA Custodian does hereby acknowledge and agree that:
a. No Required Distributions Other than Minimum Distributions. Other than
the minimum distributions described herein (or required by law) neither the Participant
nor any beneficiary shall be required to take any distribution at any time.
b. Computation of Minimum Distributions. If _________________
predeceases the Participant, then the shares under Section 2 shall be divided into separate
IRAs under Reg. 1.401(a)(9)-8QA2; and minimum distributions to each beneficiary of a
separate account shall be determined with reference to said beneficiary's life expectancy.
c. Special Rules for Contingent Beneficiaries. The identity of the
beneficiaries under this Section 2, and their respective accounts, shall be provided to the
IRA Custodian by the personal representative of the Participant's estate as soon as
practicable following Participant's death. Each such separate account shall thereafter be
paid to its respective beneficiary in annual payments equal to the required minimum
distribution under IRC §401(a)(9) to be initiated and calculated by the beneficiary;
provided, however, that at any time or times requested by the beneficiary of said separate
account, the IRA Custodian shall distribute to said beneficiary, from his or her separate
account, such amount as said beneficiary may request in writing. Upon written request by
the beneficiary of a separate account hereunder, the IRA Custodian shall transfer said
beneficiary's separate account to such other trust or custodial account specified by said
beneficiary; provided that the transferee account is an IRA under IRC §408. After the
Copyright 2013, Gair B. Petrie - 76 -
death of the Participant, the beneficiary shall have the power to determine the investment
of his or her Account. The foregoing provisions of this Section 3(c) notwithstanding,
however, during any period in which a child of the Participant for whom a separate
account is established hereunder is under _________ (___) years of age (or a descendant
of a deceased child of the Participants’ for whom a separate account is established
hereunder is under ____________ (___) years of age), the Trustee of said beneficiary’s
separate trust fund under the _________________ Family Trust shall have the sole and
exclusive right to exercise the powers enumerated in this Section 3(c) on behalf of said
beneficiary; provided, however, that any distribution (but not IRA to IRA transfer) from
said beneficiary’s account shall be made to said beneficiary. [The foregoing sentence is
an example of a “Conduit Trust” format.]
d. Spousal Rollover. If _________________ survives the Participant, the
Account payable to her under Section 1 herein, may be rolled over into an IRA in
_________________'s name, whether or not the custodian or trustee of the recipient IRA
is the IRA Custodian. The IRA Custodian will fully cooperate with _________________
with regard to such a rollover.
e. Responsibility for Minimum Distributions. Any minimum distribution
shall be initiated and calculated by the Participant while living and, after the Participant's
death, the beneficiary. The Custodian shall be under no obligation to initiate or calculate
any minimum distribution.
f. Modification of IRA Trust. By its acceptance of this beneficiary
Designation Agreement, the IRA Custodian agrees that its printed IRA Trust document is
amended so that the provisions of this Beneficiary Designation Agreement shall control
in the event of any difference or conflict between this Beneficiary Designation
Agreement and the terms of the printed IRA Trust document. Accordingly, this
Beneficiary Designation Agreement amends the printed IRA Trust document to include
provisions not otherwise in the printed IRA Trust document and to supersede and replace
any provisions otherwise inconsistent with the provisions of this Beneficiary Designation
Agreement; provided, however, that nothing herein that would be contrary to the
requirements of IRC §408 or §401(a)(9) relative to an individual retirement account and
distributions therefrom shall be effective.
Copyright 2013, Gair B. Petrie - 77 -
g. Agreement Revocable. This Beneficiary Designation Agreement may be
altered, changed or revoked during the Participant's lifetime. Upon the Participant's death,
this Beneficiary Designation Agreement shall become irrevocable.
Dated this _____ day of ______________________, 20___.
Participant:
Spouse of Participant:
IRA Custodian:
By:
Its:
Copyright 2013, Gair B. Petrie - 78 -
§13.26. Appendix D—Will Provisions (Non-Pro Rata Powers)
Allocation of Retirement Benefits in Non-Pro Rata Division. In the furtherance of the
settlement of my estate and all Trusts created under this Will, I fully and completely authorize
my Personal Representative and the Trustee of any Trust created by this Will to agree with my
wife to make an approximate equal division of our former community property (both probate and
non-probate). Therefore, my Personal Representative and Trustee may exchange with my wife
any interest I may have in community property for my wife’s community property. The property
shall be exchanged at its exchange date value. It is my intent that, to the extent possible, in the
process of any non-pro rata division of community property, any interest in an IRA under IRC
§408, a tax deferred annuity under IRC §403 or a retirement plan under IRC §401 be allocated to
my wife. Moreover, it is my intent that, in any non-pro rata distribution of assets under
Article ____, above, to the extent possible, any such benefits be allocated to that portion of the
Trust that would be included in my wife’s estate if she died immediately before such division;
provided, however, that immediately after such allocation, the right to such assets shall be
distributed, outright, to my wife.
Copyright 2013, Gair B. Petrie - 79 -
§13.27. Appendix E—Sample QTIP Beneficiary Designation Agreement
The undersigned _______________________ (“Account Holder”) and the undersigned
SEI Investments (“Custodian”) do hereby agree as follows with respect to the Account Holder’s
IRA maintained by Custodian, account number _____________________ (“Account”).
1. Primary Beneficiaries. If ______________________ (“____________”) survives the
Account Holder, the Beneficiary of the Account shall be the Trust under Section 5.2 of
the Account Holder's Will (the “Marital Trust”). Said IRA shall be known as the
“Marital Trust IRA” and shall be payable as follows:
(a) Distributions. At least annually, the Custodian shall distribute from the
Marital Trust IRA to the Marital Trust the greater of (A) all of the net income of the
Account or (B) the required minimum distribution (“RMD”) under Section 401(a)(9) of
the Internal Revenue Code of 1986 (IRC) required for such year. In addition, the
Custodian shall distribute to the Marital Trust from the Marital Trust IRA so much of
said IRA as the Trustee of the Marital Trust may, from time to time, request in writing.
Under the terms of the Marital Trust, the Trustee of the Marital Trust shall distribute to
___________________, no less frequently than annually, that amount of the foregoing as
equals the net income of the Marital Trust IRA. For the purposes of this paragraph, “net
income” shall be determined by the Trustee of the Marital Trust in accordance with
Washington State law and the Marital Trust and the Custodian shall have no liability for
such determination. Moreover, for the purposes of the foregoing, it is the Account
Holder’s intent that the Marital Trust shall be considered a “qualified trust” under Reg.
1.401(a)(9)-5 and RMDs from the Marital Trust IRA shall be computed with reference to
the life expectancy of ______________________ under Reg. 1.401(a)(9)-5QA5(c)(1).
(b) Account Holder’s Intent. The Account Holder intends that the Marital
Trust IRA and the Marital Trust qualify for the marital deduction allowable in
determining the federal estate tax upon the Account Holder’s estate. No provision
contained in this Beneficiary Designation Agreement or the IRA plan which would
prevent the Marital Trust IRA from so qualifying shall apply to the Marital Trust IRA
and it is the Account Holder’s intent that any court having jurisdiction over this
Beneficiary Designation, the IRA Plan and the Marital Trust construe said documents
accordingly.
2. Contingent Beneficiaries. In the event _____________________ does not
survive the Account Holder, the contingent beneficiaries and their shares shall be as
follows:
3. Miscellaneous.
(a) Transfers. Upon written request by the Trustee of the Marital Trust, the
Custodian shall transfer said trust’s IRA to another institution specified by the trustee
provided that (i) the transferee account is an IRA under §408 and (ii) prior to said
transfer, the transferee agrees, in writing, to be bound by all terms and provisions of this
Beneficiary Designation Agreement.
Copyright 2013, Gair B. Petrie - 80 -
(b) Limitations. Nothing herein that would be contrary to the requirements of
IRC §408 or §401(a)(9) relative to an individual retirement account and RMDs therefrom
shall be effective.
(c) Agreement Revocable. This Beneficiary Designation Agreement may be
altered, changed or revoked by the Account Holder during his lifetime and shall become
irrevocable on his death.
DATED this ___ day of _______________, 20__.
Participant: ___________________________
Spouse of Participant: __________________________
Custodian: _________________________________
By ______________________________
_____________, Its______________
Copyright 2013, Gair B. Petrie - 81 -
§13.28 Appendix F—Sample IRA QTIP Trust Provisions
MARITAL IRA TRUST
IRAs Payable to The Marital Trust of ____________________. The following shall
apply with respect to any and all IRAs of which the Marital Trust of ___________________ has
been designated as beneficiary (and the following shall supersede any contrary provision of this
Will):
a. Withdrawals From IRA. I contemplate that I may designate the
____________________________ Trust as beneficiary of a portion of one or more
individual retirement accounts ("IRA") in my name. To the extent an IRA is payable to
the said Trust, such IRA shall be referred to herein as the "Account." The Trustee shall
withdraw from the Account and distribute to my wife, during her lifetime, in annual or
more frequent installments, all of the “Net Income” of the Account (to be determined in
the manner set forth at Section 5.1(e)(b), below). If, during any calendar year, the
withdrawal of “Net Income” does not satisfy the required minimum distribution
(“RMD”) for such calendar year under Section 401(a)(9) ("RMD"), the Trustee shall
withdraw from the Account and deposit to the Trust that amount required to satisfy the
RMD requirement for such calendar year.
b. Definition of Net Income. The Trustee shall, in accordance with the
Washington State Principal and Income Act of 2002 (RCW 11.104A et seq.) or its
successor and in a manner necessary for both the Account and this Trust to qualify for
“Q-Tip” treatment under Rev. Rul. 2006-26: (i) determine all questions as to what is
income and what is principal of the Account and the Marital Trust and (ii) to credit or
charge to income or principal or to apportion between them any receipt or gain and any
charge, disbursement or loss. The power to either (i) convert principal to income under
RCW 11.104.020 or (ii) exercise the powers given by RCW 11.104.040 with respect to
creation, modification or elimination of a “unitrust” interest shall be available to and
exercisable by the Trustee in accordance with the terms of said statutes. For the purposes
of determining the Net Income required to be distributed to my wife hereunder, the Net
Income of the Account shall be determined under the foregoing principles as though the
assets of the Account are held directly by this Trust.
c. Account Q-Tip and Minimum Distributions. With regard to the Account,
the Trustee (and/or my Personal Representative) shall (i): take any and all action so that
the Account qualifies as qualified terminable interest property under Section 2056 of the
Code; and (ii) is authorized, in the Personal Representative’s sole and absolute discretion,
to elect that any part or all of the Account be treated as qualified terminable interest
property for the purpose of qualifying for the marital deduction allowable in determining
the federal estate tax and/or Washington State estate tax upon my estate. Further, the
Trustee of the Trust shall: (i) at my wife’s request, direct the Custodian of the Account to
promptly convert unproductive or under productive assets of the Account to productive
assets; and (ii) take all other actions and do all things as may be necessary so that the
Account and the Trust be treated as qualified terminable interest property for the purpose
of qualifying for the marital deduction allowable in determining the federal estate tax
Copyright 2013, Gair B. Petrie - 82 -
and/or Washington State estate tax upon my estate. I hereby direct that no provision
contained herein which would prevent the Account or this Trust from so qualifying shall
apply to the Account or this Trust. It is my intention that any court having jurisdiction
over this Trust construe it accordingly.
d. RMD Calculation. I intend that RMDs from the Account be calculated
with reference to my wife’s life expectancy. Therefore, it is my intent that the Trust be a
Qualified Trust within the meaning of Reg. 1.401(a)(9)-4QA5 and that my wife be
considered the oldest beneficiary of the Trust for RMD purposes (without application of
the “conduit trust” rules of Reg. 1.401(a)(9)-5QA7(c)(3) (Ex. 2). To that end, the
following shall apply: (i) during my wife’s lifetime, the Trustee shall not make any
distributions from the Trust (or cause distributions from the Account) to anyone other
than my wife as set forth in this Section 5, (ii) the Trustee may not distribute any portion
of the Account to or for the benefit of my estate or use the Account for payment of my
debts, taxes, expenses of administration, claims against my estate or payment of taxes due
on account of my death, (iii) following my wife’s death, no portion of the Account may
be distributed to any individual beneficiary older than my wife or, subject to contrary and
superseding federal or state law, a non-individual; and, (iv) where used in this trust, the
terms children, lineal descendants or words of similar import shall exclude anyone older
than my wife.
(e) Division of Account and Transfers Following my Wife’s Death. To
facilitate the division and distribution set forth at Section 5.3 of this Will following my
wife’s death, the Trustee shall establish separate IRAs from the Account for each
beneficiary under said Section 5.3. Each such separate IRA will receive said
beneficiary’s percentage portion of the Account as determined under Section 5.3. Each
such IRA shall be in my name (deceased) for the benefit of (“f/b/o”) the beneficiary for
whom the IRA is established. The actual division shall occur by way of a direct transfer
from the Account to each of the separate IRAs in accordance with IRC §402(c)(11).
With respect to a separate IRA payable to a trust under Section 5.3(4) of this Will, any
amount withdrawn from said IRA by the Trustee shall be paid to the beneficiary of the
trust as it is my intent that said trust qualify as a conduit trust within the meaning of
Reg. 1.401(a)(9)-5QA7(c)(3) (Ex. 2).
Copyright 2013, Gair B. Petrie - 83 -
§13.29. Appendix G—Specific Bequest of Non-Working Spouse’s Community Interest
IRAs/Retirement Plans of Wife. If my wife survives me, I hereby give, devise and
bequeath to her any community property interest I may have in any of the following held in my
wife's name or for her benefit: An individual retirement account, annuity or bond under IRC
§408, a tax deferred annuity under IRC §403 or a retirement plan under IRC §401. To the extent
my wife should disclaim any interest hereunder, said disclaimed amount shall pass as part of the
residue of my estate.
Copyright 2013, Gair B. Petrie - 84 -
§13.30. Appendix H—Will Provisions – Miscellaneous Retirement Plan IRA Matters
Retirement Benefits.
1. Retirement Benefits Defined. For the purposes of this Article ___, the term
“Retirement Benefits” shall mean and refer to any plan or account which is subject to the
minimum distribution rules of IRC §401(a)(9).
2. Non-Pro Rata Division. The Trustee of the [spousal trust] shall have the full and
complete power to agree with [my spouse] to an equal division, on a non-pro rata basis, of our
former community property. In this regard, it is my intent that, to the extent practicable and
advisable under federal tax law, any Retirement Benefits be allocated to [my spouse] as her share
of our former community property.
3. Retirement Benefits Allocated to [spousal trust]. To the extent Retirement
Benefits remain payable to the [spousal trust] after any non-pro rata division of our former
community property, it is my intent that required minimum distributions (“RMD”) be calculated
with reference to the life expectancy of [spouse]. Therefore it is my intent that this Trust be a
Qualified Trust within the meaning of Reg. 1.401(a)(9)-4QA5 and that my [husband/wife] be
considered the oldest beneficiary of the Trust for RMD purposes (without application of the
"conduit trust" rules of Reg. 1.401(a)(9)-5QA7(c)(3) (Ex. 2). To that end, the following shall
apply: (i) during my [husband/wife]'s lifetime, the Trustee shall not make any distributions from
the Trust (or cause distributions from a Retirement Benefit) to anyone other than my
[husband/wife] as set forth by Article V, above, (ii) the Trustee may not distribute any portion of
a Retirement Benefit to or for the benefit of my [husband/wife]'s estate or use a Retirement
Benefit for payment of my debts, taxes, expenses of administration, claims against my estate or
payment of taxes due on account of my death, (iii) no portion of a Retirement Benefit may be
distributed to any individual beneficiary older than my [husband/wife], or, subject to contrary
and superseding federal or state law, a non-individual; and, (iv) where used in this Trust, the
terms descendants, lineal descendants or words of similar import shall exclude anyone older than
my [husband/wife].
4. Retirement Benefits Payable to Trust for Descendant under Thirty (30) Years of
Age. To the extent any Retirement Benefits are payable to a trust for a descendant of mine under
Article ____, above, by virtue of said trust being designated beneficiary thereof, any and all
RMDs, as well as any and all other withdrawals or distributions taken by the Trustee, shall be
distributed to the beneficiary for whom the Trust is established as it is my intent that said Trust
qualify as a “conduit trust” under Reg. 1.401(a)(9)-5A7(c)(3) (ex. 2). Any provision of this Will
which would prevent said Trust from being considered a conduit trust under said regulation shall
not apply to this Trust with respect to the Retirement Benefit and provision needed for said
qualification which has been omitted from this Will shall be added under Washington state’s
Trust and Estate Dispute Resolution Act.
5. Qualified Trust. If a Retirement Benefit is payable to any Trust under this Will, it
is my intent that said Trust be considered a “qualified trust” under Reg. 1.401(a)(9). Any
provision of this Will which would result in said Trust failing to so comply, shall not apply and
Copyright 2013, Gair B. Petrie - 85 -
any provision needed for said qualification which has been omitted from this Will, shall be added
under Washington state’s Trust and Dispute Resolution Act.
6. Copy of Will to Custodian/Administrator. My Personal Representative and/or
Trustee shall provide a copy of this Will to the plan administrator or custodian of the Retirement
Benefits payable to a Trust under this Will within the time period required under Reg.
1.401(a)(9) which, as of the time of this Will is no later than October 31 of the calendar year
following the year of my death.
7. Power to Deal with Plan Administrator/Custodian. My Personal Representative
and Trustees shall each have full power and authority to request information from and provide
information to the custodian or plan administrator of any Retirement Benefit.
8. RMD for Year of Death. If, as of my death, I have not taken the full RMD for the
calendar year of my death, (i) said RMD shall be taken no later than the December 31st of the
calendar year of my death, (ii) my Personal Representative shall have the power to cause such
RMD, and (iii) said RMD shall be the property of the beneficiary of the Retirement Benefit
(subject to the conduit trust rules of Section 4, above).
9. Division of Retirement Benefits/Transfers. If a Trust created by this Will is later
divided into separate shares for additional trusts and/or individuals, the Retirement Benefits of
which said Trust is a beneficiary shall be divided into separate accounts, pro rata, according to
the respective shares to be so created. Each such account shall be in my name, deceased for the
benefit of (“f/b/o”) the individual or Trust for whom the separate account is established. Said
division shall occur by way of a direct transfer from the Retirement Benefit as it existed before
the division to each of the separate accounts. In the case of an IRA, the separate account shall be
established as separate f/b/o IRAs in the manner described above. With respect to these
successor accounts and IRAs, RMDs shall continue to be calculated in the manner as was
initially commenced following my death. Upon the attainment of an age by a child of mine for
whom a separate trust was established which age entitled said child to a portion of his or her
Trust outright, a corresponding portion of the Retirement Benefit as then so constituted shall be
directly transferred in an f/b/o account (or in the case of an IRA, a separate f/b/o IRA) in the
name of my child.
10. Non-Spouse Rollover. If the Retirement Benefit is a retirement plan (as opposed
to an IRA) and said retirement plan permits a non-spouse rollover pursuant to IRC §402(c)(11), I
direct my Trustee to complete the non-spouse rollover from said retirement plan to an IRA. Said
transferee IRA shall be fully subject to all of the foregoing provisions of this Section ____.
Under current IRS guidelines, if I should die before reaching my "required beginning date" with
respect to a retirement plan, the non-spouse rollover must be completed by the end of the
calendar year following the calendar year of my death so as to obtain with regard to the
transferee IRA the RMD calculation described at this Article ____.
Copyright 2013, Gair B. Petrie - 86 -
§13.31. Appendix I—Life Expectancy and Distribution Period Tables.
Reg. 1.401(a)(9)-9
Reg §1.401(a)(9)-9. Life expectancy and distribution period tables.
Caution: Reg. §1.401(a)(9)-9, following, is effective 1/1/2003.
Q-1. What is the life expectancy for an individual for purposes of determining required minimum
distributions under section 401(a)(9)?
A-1. The following table, referred to as the Single Life Table, is used for determining the life
expectancy of an individual:
Single Life Table
Age Life Age Life Age Life Age Life
Expectancy Expectancy Expectancy Expectancy
0 82.4 29 54.3 58 27.0 87 6.7
1 81.6 30 53.3 59 26.1 88 6.3
2 80.6 31 52.4 60 25.2 89 5.9
3 79.7 32 51.4 61 24.4 90 5.5
4 78.7 33 50.4 62 23.5 91 5.2
5 77.7 34 49.4 63 22.7 92 4.9
6 76.7 35 48.5 64 21.8 93 4.6
7 75.8 36 47.5 65 21.0 94 4.3
8 74.8 37 46.5 66 20.2 95 4.1
9 73.8 38 45.6 67 19.4 96 3.8
10 72.8 39 44.6 68 18.6 97 3.6
11 71.8 40 43.6 69 17.8 98 3.4
12 70.8 41 42.7 70 17.0 99 3.1
13 69.9 42 41.7 71 16.3 100 2.9
14 68.9 43 40.7 72 15.5 101 2.7
15 67.9 44 39.8 73 14.8 102 2.5
16 66.9 45 38.8 74 14.1 103 2.3
17 66.0 46 37.9 75 13.4 104 2.1
18 65.0 47 37.0 76 12.7 105 1.9
19 64.0 48 36.0 77 12.1 106 1.7
20 63.0 49 35.1 78 11.4 107 1.5
21 62.1 50 34.2 79 10.8 108 1.4
22 61.1 51 33.3 80 10.2 109 1.2
23 60.1 52 32.3 81 9.7 110 1.1
24 59.1 53 31.4 82 9.1 111+ 1.0
25 58.2 54 30.5 83 8.6
26 57.2 55 29.6 84 8.1
27 56.2 56 28.7 85 7.6
28 55.3 57 27.9 86 7.1
Copyright 2013, Gair B. Petrie - 87 -
Q-2. What is the applicable distribution period for an individual account for purposes of
determining required minimum distributions during an employee's lifetime under section
401(a)(9)?
A-2. Table for determining distribution period. The following table, referred to as the Uniform
Lifetime Table, is used for determining the distribution period for lifetime distributions to an
employee in situations in which the employee's spouse is either not the sole designated
beneficiary or is the sole designated beneficiary but is not more than 10 years younger than the
employee.
Uniform Lifetime Table
Age of Distribution Age of Distribution
employee period employee period
70 27.4 92 10.2
71 26.5 93 9.6
72 25.6 94 9.1
73 24.7 95 8.6
74 23.8 96 8.1
75 22.9 97 7.6
76 22.0 98 7.1
77 21.2 99 6.7
78 20.3 100 6.3
79 19.5 101 5.9
80 18.7 102 5.5
81 17.9 103 5.2
82 17.1 104 4.9
83 16.3 105 4.5
84 15.5 106 4.2
85 14.8 107 3.9
86 14.1 108 3.7
87 13.4 109 3.4
88 12.7 110 3.1
89 12.0 111 2.9
90 11.4 112 2.6
91 10.8 113 2.4
92 10.2 114 2.1
93 9.6 115+ 1.9
Q-3. What is the joint life and last survivor expectancy of an individual and beneficiary for
purposes of determining required minimum distributions under section 401(a)(9)?
A-3. The following table, referred to as the Joint and Last Survivor Table, is used for
determining the joint and last survivor life expectancy of two individuals:
Copyright 2013, Gair B. Petrie - 88 -
Joint and Last Survivor Table
AGES 0 1 2 3 4 5 6 7 8 9
0 90.0 89.5 89.0 88.6 88.2 87.8 87.4 87.1 86.8 86.5
1 89.5 89.0 88.5 88.1 87.6 87.2 86.8 86.5 86.1 85.8
2 89.0 88.5 88.0 87.5 87.1 86.6 86.2 85.8 85.5 85.1
3 88.6 88.1 87.5 87.0 86.5 86.1 85.6 85.2 84.8 84.5
4 88.2 87.6 87.1 86.5 86.0 85.5 85.1 84.6 84.2 83.8
5 87.8 87.2 86.6 86.1 85.5 85.0 84.5 84.1 83.6 83.2
6 87.4 86.8 86.2 85.6 85.1 84.5 84.0 83.5 83.1 82.6
7 87.1 86.5 85.8 85.2 84.6 84.1 83.5 83.0 82.5 82.1
8 86.8 86.1 85.5 84.8 84.2 83.6 83.1 82.5 82.0 81.6
9 86.5 85.8 85.1 84.5 83.8 83.2 82.6 82.1 81.6 81.0
10 86.2 85.5 84.8 84.1 83.5 82.8 82.2 81.6 81.1 80.6
11 85.9 85.2 84.5 83.8 83.1 82.5 81.8 81.2 80.7 80.1
12 85.7 84.9 84.2 83.5 82.8 82.1 81.5 80.8 80.2 79.7
13 85.4 84.7 84.0 83.2 82.5 81.8 81.1 80.5 79.9 79.2
14 85.2 84.5 83.7 83.0 82.2 81.5 80.8 80.1 79.5 78.9
15 85.0 84.3 83.5 82.7 82.0 81.2 80.5 79.8 79.1 78.5
16 84.9 84.1 83.3 82.5 81.7 81.0 80.2 79.5 7 8.8 78.1
17 84.7 83.9 83.1 82.3 81.5 80.7 80.0 79.2 78.5 77.8
18 84.5 83.7 82.9 82.1 81.3 80.5 79.7 79.0 78.2 77.5
19 84.4 83.6 82.7 81.9 81.1 80.3 79.5 78.7 78.0 77.3
20 84.3 83.4 82.6 81.8 80.9 80.1 79.3 78.5 77.7 77.0
21 84.1 83.3 82.4 81.6 80.8 79.9 79.1 78.3 77.5 76.8
22 84.0 83.2 82.3 81.5 80.6 79.8 78.9 78.1 77.3 76.5
23 83.9 83.1 82.2 81.3 80.5 79.6 78.8 77.9 77.1 76.3
24 83.8 83.0 82.1 81.2 80.3 79.5 78.6 77.8 76.9 76.1
25 83.7 82.9 82.0 81.1 80.2 79.3 78.5 77.6 76.8 75.9
26 83.6 82.8 81.9 81.0 80.1 79.2 78.3 77.5 76.6 75.8
27 83.6 82.7 81.8 80.9 80.0 79.1 78.2 77.4 76.5 75.6
28 83.5 82.6 81.7 80.8 79.9 79.0 78.1 77.2 76.4 75.5
29 83.4 82.6 81.6 80.7 79.8 78.9 78.0 77.1 76.2 75.4
30 83.4 82.5 81.6 80.7 79.7 78.8 77.9 77.0 76.1 75.2
31 83.3 82.4 81.5 80.6 79.7 78.8 77.8 76.9 76.0 75.1
32 83.3 82.4 81.5 80.5 79.6 78.7 77.8 76.8 75.9 75.0
33 83.2 82.3 81.4 80.5 79.5 78.6 77.7 76.8 75.9 74.9
34 83.2 82.3 81.3 80.4 79.5 78.5 77.6 76.7 75.8 74.9
35 83.1 82.2 81.3 80.4 79.4 78.5 77.6 76.6 75.7 74.8
36 83.1 82.2 81.3 80.3 79.4 78.4 77.5 76.6 75.6 74.7
37 83.0 82.2 81.2 80.3 79.3 78.4 77.4 76.5 75.6 74.6
38 83.0 82.1 81.2 80.2 79.3 78.3 77.4 76.4 75.5 74.6
39 83.0 82.1 81.1 80.2 79.2 78.3 77.3 76.4 75.5 74.5
40 82.9 82.1 81.1 80.2 79.2 78.3 77.3 76.4 75.4 74.5
41 82.9 82.0 81.1 80.1 79.2 78.2 77.3 76.3 75.4 74.4
42 82.9 82.0 81.1 80.1 79.1 78.2 77.2 76.3 75.3 74.4
Copyright 2013, Gair B. Petrie - 89 -
AGES 0 1 2 3 4 5 6 7 8 9
43 82.9 82.0 81.0 80.1 79.1 78.2 77.2 76.2 75.3 74.3
44 82.8 81.9 81.0 80.0 79.1 78.1 77.2 76.2 75.2 74.3
45 82.8 81.9 81.0 80.0 79.1 78.1 77.1 76.2 75.2 74.3
46 82.8 81.9 81.0 80.0 79.0 78.1 77.1 76.1 75.2 74.2
47 82.8 81.9 80.9 80.0 79.0 78.0 77.1 76.1 75.2 74.2
48 82.8 81.9 80.9 80.0 79.0 78.0 77.1 76.1 75.1 74.2
49 82.7 81.8 80.9 79.9 79.0 78.0 77.0 76.1 75.1 74.1
50 82.7 81.8 80.9 79.9 79.0 78.0 77.0 76.0 75.1 74.1
51 82.7 81.8 80.9 79.9 78.9 78.0 77.0 76.0 75.1 74.1
52 82.7 81.8 80.9 79.9 78.9 78.0 77.0 76.0 75.0 74.1
53 82.7 81.8 80.8 79.9 78.9 77.9 77.0 76.0 75.0 74.0
54 82.7 81.8 80.8 79.9 78.9 77.9 76.9 76.0 75.0 74.0
55 82.6 81.8 80.8 79.8 78.9 77.9 76.9 76.0 75.0 74.0
56 82.6 81.7 80.8 79.8 78.9 77.9 76.9 75.9 75.0 74.0
57 82.6 81.7 80.8 79.8 78.9 77.9 76.9 75.9 75.0 74.0
58 82.6 81.7 80.8 79.8 78.8 77.9 76.9 75.9 74.9 74.0
59 82.6 81.7 80.8 79.8 78.8 77.9 76.9 75.9 74.9 74.0
60 82.6 81.7 80.8 79.8 78.8 77.8 76.9 75.9 74.9 73.9
61 82.6 81.7 80.8 79.8 78.8 77.8 76.9 75.9 74.9 73.9
62 82.6 81.7 80.7 79.8 78.8 77.8 76.9 75.9 74.9 73.9
63 82.6 81.7 80.7 79.8 78.8 77.8 76.8 75.9 74.9 73.9
64 82.5 81.7 80.7 79.8 78.8 77.8 76.8 75.9 74.9 73.9
65 82.5 81.7 80.7 79.8 78.8 77.8 76.8 75.8 74.9 73.9
66 82.5 81.7 80.7 79.7 78.8 77.8 76.8 75.8 74.9 73.9
67 82.5 81.7 80.7 79.7 78.8 77.8 76.8 75.8 74.9 73.9
68 82.5 81.6 80.7 79.7 78.8 77.8 76.8 75.8 74.8 73.9
69 82.5 81.6 80.7 79.7 78.8 77.8 76.8 75.8 74.8 73.9
70 82.5 81.6 80.7 79.7 78.8 77.8 76.8 75.8 74.8 73.9
71 82.5 81.6 80.7 79.7 78.7 77.8 76.8 75.8 74.8 73.8
72 82.5 81.6 80.7 79.7 78.7 77.8 76.8 75.8 74.8 73.8
73 82.5 81.6 80.7 79.7 78.7 77.8 76.8 75.8 74.8 73.8
74 82.5 81.6 80.7 79.7 78.7 77.8 76.8 75.8 74.8 73.8
75 82.5 81.6 80.7 79.7 78.7 77.8 76.8 75.8 74.8 73.8
76 82.5 81.6 80.7 79.7 78.7 77.8 76.8 75.8 74.8 73.8
77 82.5 81.6 80.7 79.7 78.7 77.7 76.8 75.8 74.8 73.8
78 82.5 81.6 80.7 79.7 78.7 77.7 76.8 75.8 74.8 73.8
79 82.5 81.6 80.7 79.7 78.7 77.7 76.8 75.8 74.8 73.8
80 82.5 81.6 80.7 79.7 78.7 77.7 76.8 75.8 74.8 73.8
81 82.4 81.6 80.7 79.7 78.7 77.7 76.8 75.8 74.8 73.8
82 82.4 81.6 80.7 79.7 78.7 77.7 76.8 75.8 74.8 73.8
83 82.4 81.6 80.7 79.7 78.7 77.7 76.8 75.8 74.8 73.8
84 82.4 81.6 80.7 79.7 78.7 77.7 76.8 75.8 74.8 73.8
85 82.4 81.6 80.6 79.7 78.7 77.7 76.8 75.8 74.8 73.8
86 82.4 81.6 80.6 79.7 78.7 77.7 76.7 75.8 74.8 73.8
Copyright 2013, Gair B. Petrie - 90 -
AGES 0 1 2 3 4 5 6 7 8 9
87 82.4 81.6 80.6 79.7 78.7 77.7 76.7 75.8 74.8 73.8
88 82.4 81.6 80.6 79.7 78.7 77.7 76.7 75.8 74.8 73.8
89 82.4 81.6 80.6 79.7 78.7 77.7 76.7 75.8 74.8 73.8
90 82.4 81.6 80.6 79.7 78.7 77.7 76.7 75.8 74.8 73.8
91 82.4 81.6 80.6 79.7 78.7 77.7 76.7 75.8 74.8 73.8
92 82.4 81.6 80.6 79.7 78.7 77.7 76.7 75.8 74.8 73.8
93 82.4 81.6 80.6 79.7 78.7 77.7 76.7 75.8 74.8 73.8
94 82.4 81.6 80.6 79.7 78.7 77.7 76.7 75.8 74.8 73.8
95 82.4 81.6 80.6 79.7 78.7 77.7 76.7 75.8 74.8 73.8
96 82.4 81.6 80.6 79.7 78.7 77.7 76.7 75.8 74.8 73.8
97 82.4 81.6 80.6 79.7 78.7 77.7 76.7 75.8 74.8 73.8
98 82.4 81.6 80.6 79.7 78.7 77.7 76.7 75.8 74.8 73.8
99 82.4 81.6 80.6 79.7 78.7 77.7 76.7 75.8 74.8 73.8
100 82.4 81.6 80.6 79.7 78.7 77.7 76.7 75.8 74.8 73.8
101 82.4 81.6 80.6 79.7 78.7 77.7 76.7 75.8 74.8 73.8
102 82.4 81.6 80.6 79.7 78.7 77.7 76.7 75.8 74.8 73.8
103 82.4 81.6 80.6 79.7 78.7 77.7 76.7 75.8 74.8 73.8
104 82.4 81.6 80.6 79.7 78.7 77.7 76.7 75.8 74.8 73.8
105 82.4 81.6 80.6 79.7 78.7 77.7 76.7 75.8 74.8 73.8
106 82.4 81.6 80.6 79.7 78.7 77.7 76.7 75.8 74.8 73.8
107 82.4 81.6 80.6 79.7 78.7 77.7 76.7 75.8 74.8 73.8
108 82.4 81.6 80.6 79.7 78.7 77.7 76.7 75.8 74.8 73.8
109 82.4 81.6 80.6 79.7 78.7 77.7 76.7 75.8 74.8 73.8
110 82.4 81.6 80.6 79.7 78.7 77.7 76.7 75.8 74.8 73.8
111 82.4 81.6 80.6 79.7 78.7 77.7 76.7 75.8 74.8 73.8
112 82.4 81.6 80.6 79.7 78.7 77.7 76.7 75.8 74.8 73.8
113 82.4 81.6 80.6 79.7 78.7 77.7 76.7 75.8 74.8 73.8
114 82.4 81.6 80.6 79.7 78.7 77.7 76.7 75.8 74.8 73.8
115+ 82.4 81.6 80.6 79.7 78.7 77.7 76.7 75.8 74.8 73.8
AGES 10 11 12 13 14 15 16 17 18 19
10 80.0 79.6 79.1 78.7 78.2 77.9 77.5 77.2 76.8 76.5
11 79.6 79.0 78.6 78.1 77.7 77.3 76.9 76.5 76.2 75.8
12 79.1 78.6 78.1 77.6 77.1 76.7 76.3 75.9 75.5 75.2
13 78.7 78.1 77.6 77.1 76.6 76.1 75.7 75.3 74.9 74.5
14 78.2 77.7 77.1 76.6 76.1 75.6 75.1 74.7 74.3 73.9
15 77.9 77.3 76.7 76.1 75.6 75.1 74.6 74.1 73.7 73.3
16 77.5 76.9 76.3 75.7 75.1 74.6 74.1 73.6 73.1 72.7
17 77.2 76.5 75.9 75.3 74.7 74.1 73.6 73.1 72.6 72.1
18 76.8 76.2 75.5 74.9 74.3 73.7 73.1 72.6 72.1 71.6
19 76.5 75.8 75.2 74.5 73.9 73.3 72.7 72.1 71.6 71.1
20 76.3 75.5 74.8 74.2 73.5 72.9 72.3 71.7 71.1 70.6
21 76.0 75.3 74.5 73.8 73.2 72.5 71.9 71.3 70.7 70.1
22 75.8 75.0 74.3 73.5 72.9 72.2 71.5 70.9 70.3 69.7
Copyright 2013, Gair B. Petrie - 91 -
AGES 10 11 12 13 14 15 16 17 18 19
23 75.5 74.8 74.0 73.3 72.6 71.9 71.2 70.5 69.9 69.3
24 75.3 74.5 73.8 73.0 72.3 71.6 70.9 70.2 69.5 68.9
25 75.1 74.3 73.5 72.8 72.0 71.3 70.6 69.9 69.2 68.5
26 75.0 74.1 73.3 72.5 71.8 71.0 70.3 69.6 68.9 68.2
27 74.8 74.0 73.1 72.3 71.6 70.8 70.0 69.3 68.6 67.9
28 74.6 73.8 73.0 72.2 71.3 70.6 69.8 69.0 68.3 67.6
29 74.5 73.6 72.8 72.0 71.2 70.4 69.6 68.8 68.0 67.3
30 74.4 73.5 72.7 71.8 71.0 70.2 69.4 68.6 67.8 67.1
31 74.3 73.4 72.5 71.7 70.8 70.0 69.2 68.4 67.6 66.8
32 74.1 73.3 72.4 71.5 70.7 69.8 69.0 68.2 67.4 66.6
33 74.0 73.2 72.3 71.4 70.5 69.7 68.8 68.0 67.2 66.4
34 73.9 73.0 72.2 71.3 70.4 69.5 68.7 67.8 67.0 66.2
35 73.9 73.0 72.1 71.2 70.3 69.4 68.5 67.7 66.8 66.0
36 73.8 72.9 72.0 71.1 70.2 69.3 68.4 67.6 66.7 65.9
37 73.7 72.8 71.9 71.0 70.1 69.2 68.3 67.4 66.6 65.7
38 73.6 72.7 71.8 70.9 70.0 69.1 68.2 67.3 66.4 65.6
39 73.6 72.7 71.7 70.8 69.9 69.0 68.1 67.2 66.3 65.4
40 73.5 72.6 71.7 70.7 69.8 68.9 68.0 67.1 66.2 65.3
41 73.5 72.5 71.6 70.7 69.7 68.8 67.9 67.0 66.1 65.2
42 73.4 72.5 71.5 70.6 69.7 68.8 67.8 66.9 66.0 65.1
43 73.4 72.4 71.5 70.6 69.6 68.7 67.8 66.8 65.9 65.0
44 73.3 72.4 71.4 70.5 69.6 68.6 67.7 66.8 65.9 64.9
45 73.3 72.3 71.4 70.5 69.5 68.6 67.6 66.7 65.8 64.9
46 73.3 72.3 71.4 70.4 69.5 68.5 67.6 66.6 65.7 64.8
47 73.2 72.3 71.3 70.4 69.4 68.5 67.5 66.6 65.7 64.7
48 73.2 72.2 71.3 70.3 69.4 68.4 67.5 66.5 65.6 64.7
49 73.2 72.2 71.2 70.3 69.3 68.4 67.4 66.5 65.6 64.6
50 73.1 72.2 71.2 70.3 69.3 68.4 67.4 66.5 65.5 64.6
51 73.1 72.2 71.2 70.2 69.3 68.3 67.4 66.4 65.5 64.5
52 73.1 72.1 71.2 70.2 69.2 68.3 67.3 66.4 65.4 64.5
53 73.1 72.1 71.1 70.2 69.2 68.3 67.3 66.3 65.4 64.4
54 73.1 72.1 71.1 70.2 69.2 68.2 67.3 66.3 65.4 64.4
55 73.0 72.1 71.1 70.1 69.2 68.2 67.2 66.3 65.3 64.4
56 73.0 72.1 71.1 70.1 69.1 68.2 67.2 66.3 65.3 64.3
57 73.0 72.0 71.1 70.1 69.1 68.2 67.2 66.2 65.3 64.3
58 73.0 72.0 71.0 70.1 69.1 68.1 67.2 66.2 65.2 64.3
59 73.0 72.0 71.0 70.1 69.1 68.1 67.2 66.2 65.2 64.3
60 73.0 72.0 71.0 70.0 69.1 68.1 67.1 66.2 65.2 64.2
61 73.0 72.0 71.0 70.0 69.1 68.1 67.1 66.2 65.2 64.2
62 72.9 72.0 71.0 70.0 69.0 68.1 67.1 66.1 65.2 64.2
63 72.9 72.0 71.0 70.0 69.0 68.1 67.1 66.1 65.2 64.2
64 72.9 71.9 71.0 70.0 69.0 68.0 67.1 66.1 65.1 64.2
65 72.9 71.9 71.0 70.0 69.0 68.0 67.1 66.1 65.1 64.2
66 72.9 71.9 70.9 70.0 69.0 68.0 67.1 66.1 65.1 64.1
Copyright 2013, Gair B. Petrie - 92 -
AGES 10 11 12 13 14 15 16 17 18 19
67 72.9 71.9 70.9 70.0 69.0 68.0 67.0 66.1 65.1 64.1
68 72.9 71.9 70.9 70.0 69.0 68.0 67.0 66.1 65.1 64.1
69 72.9 71.9 70.9 69.9 69.0 68.0 67.0 66.1 65.1 64.1
70 72.9 71.9 70.9 69.9 69.0 68.0 67.0 66.0 65.1 64.1
71 72.9 71.9 70.9 69.9 69.0 68.0 67.0 66.0 65.1 64.1
72 72.9 71.9 70.9 69.9 69.0 68.0 67.0 66.0 65.1 64.1
73 72.9 71.9 70.9 69.9 68.9 68.0 67.0 66.0 65.0 64.1
74 72.9 71.9 70.9 69.9 68.9 68.0 67.0 66.0 65.0 64.1
75 72.8 71.9 70.9 69.9 68.9 68.0 67.0 66.0 65.0 64.1
76 72.8 71.9 70.9 69.9 68.9 68.0 67.0 66.0 65.0 64.1
77 72.8 71.9 70.9 69.9 68.9 68.0 67.0 66.0 65.0 64.1
78 72.8 71.9 70.9 69.9 68.9 67.9 67.0 66.0 65.0 64.0
79 72.8 71.9 70.9 69.9 68.9 67.9 67.0 66.0 65.0 64.0
80 72.8 71.9 70.9 69.9 68.9 67.9 67.0 66.0 65.0 64.0
81 72.8 71.8 70.9 69.9 68.9 67.9 67.0 66.0 65.0 64.0
82 72.8 71.8 70.9 69.9 68.9 67.9 67.0 66.0 65.0 64.0
83 72.8 71.8 70.9 69.9 68.9 67.9 67.0 66.0 65.0 64.0
84 72.8 71.8 70.9 69.9 68.9 67.9 67.0 66.0 65.0 64.0
85 72.8 71.8 70.9 69.9 68.9 67.9 66.9 66.0 65.0 64.0
86 72.8 71.8 70.9 69.9 68.9 67.9 66.9 66.0 65.0 64.0
87 72.8 71.8 70.9 69.9 68.9 67.9 66.9 66.0 65.0 64.0
88 72.8 71.8 70.9 69.9 68.9 67.9 66.9 66.0 65.0 64.0
89 72.8 71.8 70.9 69.9 68.9 67.9 66.9 66.0 65.0 64.0
90 72.8 71.8 70.9 69.9 68.9 67.9 66.9 66.0 65.0 64.0
91 72.8 71.8 70.9 69.9 68.9 67.9 66.9 66.0 65.0 64.0
92 72.8 71.8 70.9 69.9 68.9 67.9 66.9 66.0 65.0 64.0
93 72.8 71.8 70.9 69.9 68.9 67.9 66.9 66.0 65.0 64.0
94 72.8 71.8 70.8 69.9 68.9 67.9 66.9 66.0 65.0 64.0
95 72.8 71.8 70.8 69.9 68.9 67.9 66.9 66.0 65.0 64.0
96 72.8 71.8 70.8 69.9 68.9 67.9 66.9 66.0 65.0 64.0
97 72.8 71.8 70.8 69.9 68.9 67.9 66.9 66.0 65.0 64.0
98 72.8 71.8 70.8 69.9 68.9 67.9 66.9 66.0 65.0 64.0
99 72.8 71.8 70.8 69.9 68.9 67.9 66.9 66.0 65.0 64.0
100 72.8 71.8 70.8 69.9 68.9 67.9 66.9 66.0 65.0 64.0
101 72.8 71.8 70.8 69.9 68.9 67.9 66.9 66.0 65.0 64.0
102 72.8 71.8 70.8 69.9 68.9 67.9 66.9 66.0 65.0 64.0
103 72.8 71.8 70.8 69.9 68.9 67.9 66.9 66.0 65.0 64.0
104 72.8 71.8 70.8 69.9 68.9 67.9 66.9 66.0 65.0 64.0
105 72.8 71.8 70.8 69.9 68.9 67.9 66.9 66.0 65.0 64.0
106 72.8 71.8 70.8 69.9 68.9 67.9 66.9 66.0 65.0 64.0
107 72.8 71.8 70.8 69.9 68.9 67.9 66.9 66.0 65.0 64.0
108 72.8 71.8 70.8 69.9 68.9 67.9 66.9 66.0 65.0 64.0
109 72.8 71.8 70.8 69.9 68.9 67.9 66.9 66.0 65.0 64.0
110 72.8 71.8 70.8 69.9 68.9 67.9 66.9 66.0 65.0 64.0
Copyright 2013, Gair B. Petrie - 93 -
AGES 10 11 12 13 14 15 16 17 18 19
111 72.8 71.8 70.8 69.9 68.9 67.9 66.9 66.0 65.0 64.0
112 72.8 71.8 70.8 69.9 68.9 67.9 66.9 66.0 65.0 64.0
113 72.8 71.8 70.8 69.9 68.9 67.9 66.9 66.0 65.0 64.0
114 72.8 71.8 70.8 69.9 68.9 67.9 66.9 66.0 65.0 64.0
115+ 72.8 71.8 70.8 69.9 68.9 67.9 66.9 66.0 65.0 64.0
AGES 20 21 22 23 24 25 26 27 28 29
20 70.1 69.6 69.1 68.7 68.3 67.9 67.5 67.2 66.9 66.6
21 69.6 69.1 68.6 68.2 67.7 67.3 66.9 66.6 66.2 65.9
22 69.1 68.6 68.1 67.6 67.2 66.7 66.3 65.9 65.6 65.2
23 68.7 68.2 67.6 67.1 66.6 66.2 65.7 65.3 64.9 64.6
24 68.3 67.7 67.2 66.6 66.1 65.6 65.2 64.7 64.3 63.9
25 67.9 67.3 66.7 66.2 65.6 65.1 64.6 64.2 63.7 63.3
26 67.5 66.9 66.3 65.7 65.2 64.6 64.1 63.6 63.2 62.8
27 67.2 66.6 65.9 65.3 64.7 64.2 63.6 63.1 62.7 62.2
28 66.9 66.2 65.6 64.9 64.3 63.7 63.2 62.7 62.1 61.7
29 66.6 65.9 65.2 64.6 63.9 63.3 62.8 62.2 61.7 61.2
30 66.3 65.6 64.9 64.2 63.6 62.9 62.3 61.8 61.2 60.7
31 66.1 65.3 64.6 63.9 63.2 62.6 62.0 61.4 60.8 60.2
32 65.8 65.1 64.3 63.6 62.9 62.2 61.6 61.0 60.4 59.8
33 65.6 64.8 64.1 63.3 62.6 61.9 61.3 60.6 60.0 59.4
34 65.4 64.6 63.8 63.1 62.3 61.6 60.9 60.3 59.6 59.0
35 65.2 64.4 63.6 62.8 62.1 61.4 60.6 59.9 59.3 58.6
36 65.0 64.2 63.4 62.6 61.9 61.1 60.4 59.6 59.0 58.3
37 64.9 64.0 63.2 62.4 61.6 60.9 60.1 59.4 58.7 58.0
38 64.7 63.9 63.0 62.2 61.4 60.6 59.9 59.1 58.4 57.7
39 64.6 63.7 62.9 62.1 61.2 60.4 59.6 58.9 58.1 57.4
40 64.4 63.6 62.7 61.9 61.1 60.2 59.4 58.7 57.9 57.1
41 64.3 63.5 62.6 61.7 60.9 60.1 59.3 58.5 57.7 56.9
42 64.2 63.3 62.5 61.6 60.8 59.9 59.1 58.3 57.5 56.7
43 64.1 63.2 62.4 61.5 60.6 59.8 58.9 58.1 57.3 56.5
44 64.0 63.1 62.2 61.4 60.5 59.6 58.8 57.9 57.1 56.3
45 64.0 63.0 62.2 61.3 60.4 59.5 58.6 57.8 56.9 56.1
46 63.9 63.0 62.1 61.2 60.3 59.4 58.5 57.7 56.8 56.0
47 63.8 62.9 62.0 61.1 60.2 59.3 58.4 57.5 56.7 55.8
48 63.7 62.8 61.9 61.0 60.1 59.2 58.3 57.4 56.5 55.7
49 63.7 62.8 61.8 60.9 60.0 59.1 58.2 57.3 56.4 55.6
50 63.6 62.7 61.8 60.8 59.9 59.0 58.1 57.2 56.3 55.4
51 63.6 62.6 61.7 60.8 59.9 58.9 58.0 57.1 56.2 55.3
52 63.5 62.6 61.7 60.7 59.8 58.9 58.0 57.1 56.1 55.2
53 63.5 62.5 61.6 60.7 59.7 58.8 57.9 57.0 56.1 55.2
54 63.5 62.5 61.6 60.6 59.7 58.8 57.8 56.9 56.0 55.1
55 63.4 62.5 61.5 60.6 59.6 58.7 57.8 56.8 55.9 55.0
56 63.4 62.4 61.5 60.5 59.6 58.7 57.7 56.8 55.9 54.9
Copyright 2013, Gair B. Petrie - 94 -
AGES 20 21 22 23 24 25 26 27 28 29
57 63.4 62.4 61.5 60.5 59.6 58.6 57.7 56.7 55.8 54.9
58 63.3 62.4 61.4 60.5 59.5 58.6 57.6 56.7 55.8 54.8
59 63.3 62.3 61.4 60.4 59.5 58.5 57.6 56.7 55.7 54.8
60 63.3 62.3 61.4 60.4 59.5 58.5 57.6 56.6 55.7 54.7
61 63.3 62.3 61.3 60.4 59.4 58.5 57.5 56.6 55.6 54.7
62 63.2 62.3 61.3 60.4 59.4 58.4 57.5 56.5 55.6 54.7
63 63.2 62.3 61.3 60.3 59.4 58.4 57.5 56.5 55.6 54.6
64 63.2 62.2 61.3 60.3 59.4 58.4 57.4 56.5 55.5 54.6
65 63.2 62.2 61.3 60.3 59.3 58.4 57.4 56.5 55.5 54.6
66 63.2 62.2 61.2 60.3 59.3 58.4 57.4 56.4 55.5 54.5
67 63.2 62.2 61.2 60.3 59.3 58.3 57.4 56.4 55.5 54.5
68 63.1 62.2 61.2 60.2 59.3 58.3 57.4 56.4 55.4 54.5
69 63.1 62.2 61.2 60.2 59.3 58.3 57.3 56.4 55.4 54.5
70 63.1 62.2 61.2 60.2 59.3 58.3 57.3 56.4 55.4 54.4
71 63.1 62.1 61.2 60.2 59.2 58.3 57.3 56.4 55.4 54.4
72 63.1 62.1 61.2 60.2 59.2 58.3 57.3 56.3 55.4 54.4
73 63.1 62.1 61.2 60.2 59.2 58.3 57.3 56.3 55.4 54.4
74 63.1 62.1 61.2 60.2 59.2 58.2 57.3 56.3 55.4 54.4
75 63.1 62.1 61.1 60.2 59.2 58.2 57.3 56.3 55.3 54.4
76 63.1 62.1 61.1 60.2 59.2 58.2 57.3 56.3 55.3 54.4
77 63.1 62.1 61.1 60.2 59.2 58.2 57.3 56.3 55.3 54.4
78 63.1 62.1 61.1 60.2 59.2 58.2 57.3 56.3 55.3 54.4
79 63.1 62.1 61.1 60.2 59.2 58.2 57.2 56.3 55.3 54.3
80 63.1 62.1 61.1 60.1 59.2 58.2 57.2 56.3 55.3 54.3
81 63.1 62.1 61.1 60.1 59.2 58.2 57.2 56.3 55.3 54.3
82 63.1 62.1 61.1 60.1 59.2 58.2 57.2 56.3 55.3 54.3
83 63.1 62.1 61.1 60.1 59.2 58.2 57.2 56.3 55.3 54.3
84 63.0 62.1 61.1 60.1 59.2 58.2 57.2 56.3 55.3 54.3
85 63.0 62.1 61.1 60.1 59.2 58.2 57.2 56.3 55.3 54.3
86 63.0 62.1 61.1 60.1 59.2 58.2 57.2 56.2 55.3 54.3
87 63.0 62.1 61.1 60.1 59.2 58.2 57.2 56.2 55.3 54.3
88 63.0 62.1 61.1 60.1 59.2 58.2 57.2 56.2 55.3 54.3
89 63.0 62.1 61.1 60.1 59.1 58.2 57.2 56.2 55.3 54.3
90 63.0 62.1 61.1 60.1 59.1 58.2 57.2 56.2 55.3 54.3
91 63.0 62.1 61.1 60.1 59.1 58.2 57.2 56.2 55.3 54.3
92 63.0 62.1 61.1 60.1 59.1 58.2 57.2 56.2 55.3 54.3
93 63.0 62.1 61.1 60.1 59.1 58.2 57.2 56.2 55.3 54.3
94 63.0 62.1 61.1 60.1 59.1 58.2 57.2 56.2 55.3 54.3
95 63.0 62.1 61.1 60.1 59.1 58.2 57.2 56.2 55.3 54.3
96 63.0 62.1 61.1 60.1 59.1 58.2 57.2 56.2 55.3 54.3
97 63.0 62.1 61.1 60.1 59.1 58.2 57.2 56.2 55.3 54.3
98 63.0 62.1 61.1 60.1 59.1 58.2 57.2 56.2 55.3 54.3
99 63.0 62.1 61.1 60.1 59.1 58.2 57.2 56.2 55.3 54.3
100 63.0 62.1 61.1 60.1 59.1 58.2 57.2 56.2 55.3 54.3
Copyright 2013, Gair B. Petrie - 95 -
AGES 20 21 22 23 24 25 26 27 28 29
101 63.0 62.1 61.1 60.1 59.1 58.2 57.2 56.2 55.3 54.3
102 63.0 62.1 61.1 60.1 59.1 58.2 57.2 56.2 55.3 54.3
103 63.0 62.1 61.1 60.1 59.1 58.2 57.2 56.2 55.3 54.3
104 63.0 62.1 61.1 60.1 59.1 58.2 57.2 56.2 55.3 54.3
105 63.0 62.1 61.1 60.1 59.1 58.2 57.2 56.2 55.3 54.3
106 63.0 62.1 61.1 60.1 59.1 58.2 57.2 56.2 55.3 54.3
107 63.0 62.1 61.1 60.1 59.1 58.2 57.2 56.2 55.3 54.3
108 63.0 62.1 61.1 60.1 59.1 58.2 57.2 56.2 55.3 54.3
109 63.0 62.1 61.1 60.1 59.1 58.2 57.2 56.2 55.3 54.3
110 63.0 62.1 61.1 60.1 59.1 58.2 57.2 56.2 55.3 54.3
111 63.0 62.1 61.1 60.1 59.1 58.2 57.2 56.2 55.3 54.3
112 63.0 62.1 61.1 60.1 59.1 58.2 57.2 56.2 55.3 54.3
113 63.0 62.1 61.1 60.1 59.1 58.2 57.2 56.2 55.3 54.3
114 63.0 62.1 61.1 60.1 59.1 58.2 57.2 56.2 55.3 54.3
115+ 63.0 62.1 61.1 60.1 59.1 58.2 57.2 56.2 55.3 54.3
AGES 30 31 32 33 34 35 36 37 38 39
30 60.2 59.7 59.2 58.8 58.4 58.0 57.6 57.3 57.0 56.7
31 59.7 59.2 58.7 58.2 57.8 57.4 57.0 56.6 56.3 56.0
32 59.2 58.7 58.2 57.7 57.2 56.8 56.4 56.0 55.6 55.3
33 58.8 58.2 57.7 57.2 56.7 56.2 55.8 55.4 55.0 54.7
34 58.4 57.8 57.2 56.7 56.2 55.7 55.3 54.8 54.4 54.0
35 58.0 57.4 56.8 56.2 55.7 55.2 54.7 54.3 53.8 53.4
36 57.6 57.0 56.4 55.8 55.3 54.7 54.2 53.7 53.3 52.8
37 57.3 56.6 56.0 55.4 54.8 54.3 53.7 53.2 52.7 52.3
38 57.0 56.3 55.6 55.0 54.4 53.8 53.3 52.7 52.2 51.7
39 56.7 56.0 55.3 54.7 54.0 53.4 52.8 52.3 51.7 51.2
40 56.4 55.7 55.0 54.3 53.7 53.0 52.4 51.8 51.3 50.8
41 56.1 55.4 54.7 54.0 53.3 52.7 52.0 51.4 50.9 50.3
42 55.9 55.2 54.4 53.7 53.0 52.3 51.7 51.1 50.4 49.9
43 55.7 54.9 54.2 53.4 52.7 52.0 51.3 50.7 50.1 49.5
44 55.5 54.7 53.9 53.2 52.4 51.7 51.0 50.4 49.7 49.1
45 55.3 54.5 53.7 52.9 52.2 51.5 50.7 50.0 49.4 48.7
46 55.1 54.3 53.5 52.7 52.0 51.2 50.5 49.8 49.1 48.4
47 55.0 54.1 53.3 52.5 51.7 51.0 50.2 49.5 48.8 48.1
48 54.8 54.0 53.2 52.3 51.5 50.8 50.0 49.2 48.5 47.8
49 54.7 53.8 53.0 52.2 51.4 50.6 49.8 49.0 48.2 47.5
50 54.6 53.7 52.9 52.0 51.2 50.4 49.6 48.8 48.0 47.3
51 54.5 53.6 52.7 51.9 51.0 50.2 49.4 48.6 47.8 47.0
52 54.4 53.5 52.6 51.7 50.9 50.0 49.2 48.4 47.6 46.8
53 54.3 53.4 52.5 51.6 50.8 49.9 49.1 48.2 47.4 46.6
54 54.2 53.3 52.4 51.5 50.6 49.8 48.9 48.1 47.2 46.4
55 54.1 53.2 52.3 51.4 50.5 49.7 48.8 47.9 47.1 46.3
56 54.0 53.1 52.2 51.3 50.4 49.5 48.7 47.8 47.0 46.1
Copyright 2013, Gair B. Petrie - 96 -
AGES 30 31 32 33 34 35 36 37 38 39
57 54.0 53.0 52.1 51.2 50.3 49.4 48.6 47.7 46.8 46.0
58 53.9 53.0 52.1 51.2 50.3 49.4 48.5 47.6 46.7 45.8
59 53.8 52.9 52.0 51.1 50.2 49.3 48.4 47.5 46.6 45.7
60 53.8 52.9 51.9 51.0 50.1 49.2 48.3 47.4 46.5 45.6
61 53.8 52.8 51.9 51.0 50.0 49.1 48.2 47.3 46.4 45.5
62 53.7 52.8 51.8 50.9 50.0 49.1 48.1 47.2 46.3 45.4
63 53.7 52.7 51.8 50.9 49.9 49.0 48.1 47.2 46.3 45.3
64 53.6 52.7 51.8 50.8 49.9 48.9 48.0 47.1 46.2 45.3
65 53.6 52.7 51.7 50.8 49.8 48.9 48.0 47.0 46.1 45.2
66 53.6 52.6 51.7 50.7 49.8 48.9 47.9 47.0 46.1 45.1
67 53.6 52.6 51.7 50.7 49.8 48.8 47.9 46.9 46.0 45.1
68 53.5 52.6 51.6 50.7 49.7 48.8 47.8 46.9 46.0 45.0
69 53.5 52.6 51.6 50.6 49.7 48.7 47.8 46.9 45.9 45.0
70 53.5 52.5 51.6 50.6 49.7 48.7 47.8 46.8 45.9 44.9
71 53.5 52.5 51.6 50.6 49.6 48.7 47.7 46.8 45.9 44.9
72 53.5 52.5 51.5 50.6 49.6 48.7 47.7 46.8 45.8 44.9
73 53.4 52.5 51.5 50.6 49.6 48.6 47.7 46.7 45.8 44.8
74 53.4 52.5 51.5 50.5 49.6 48.6 47.7 46.7 45.8 44.8
75 53.4 52.5 51.5 50.5 49.6 48.6 47.7 46.7 45.7 44.8
76 53.4 52.4 51.5 50.5 49.6 48.6 47.6 46.7 45.7 44.8
77 53.4 52.4 51.5 50.5 49.5 48.6 47.6 46.7 45.7 44.8
78 53.4 52.4 51.5 50.5 49.5 48.6 47.6 46.6 45.7 44.7
79 53.4 52.4 51.5 50.5 49.5 48.6 47.6 46.6 45.7 44.7
80 53.4 52.4 51.4 50.5 49.5 48.5 47.6 46.6 45.7 44.7
81 53.4 52.4 51.4 50.5 49.5 48.5 47.6 46.6 45.7 44.7
82 53.4 52.4 51.4 50.5 49.5 48.5 47.6 46.6 45.6 44.7
83 53.4 52.4 51.4 50.5 49.5 48.5 47.6 46.6 45.6 44.7
84 53.4 52.4 51.4 50.5 49.5 48.5 47.6 46.6 45.6 44.7
85 53.3 52.4 51.4 50.4 49.5 48.5 47.5 46.6 45.6 44.7
86 53.3 52.4 51.4 50.4 49.5 48.5 47.5 46.6 45.6 44.6
87 53.3 52.4 51.4 50.4 49.5 48.5 47.5 46.6 45.6 44.6
88 53.3 52.4 51.4 50.4 49.5 48.5 47.5 46.6 45.6 44.6
89 53.3 52.4 51.4 50.4 49.5 48.5 47.5 46.6 45.6 44.6
90 53.3 52.4 51.4 50.4 49.5 48.5 47.5 46.6 45.6 44.6
91 53.3 52.4 51.4 50.4 49.5 48.5 47.5 46.6 45.6 44.6
92 53.3 52.4 51.4 50.4 49.5 48.5 47.5 46.6 45.6 44.6
93 53.3 52.4 51.4 50.4 49.5 48.5 47.5 46.6 45.6 44.6
94 53.3 52.4 51.4 50.4 49.5 48.5 47.5 46.6 45.6 44.6
95 53.3 52.4 51.4 50.4 49.5 48.5 47.5 46.5 45.6 44.6
96 53.3 52.4 51.4 50.4 49.5 48.5 47.5 46.5 45.6 44.6
97 53.3 52.4 51.4 50.4 49.5 48.5 47.5 46.5 45.6 44.6
98 53.3 52.4 51.4 50.4 49.5 48.5 47.5 46.5 45.6 44.6
99 53.3 52.4 51.4 50.4 49.5 48.5 47.5 46.5 45.6 44.6
100 53.3 52.4 51.4 50.4 49.5 48.5 47.5 46.5 45.6 44.6
Copyright 2013, Gair B. Petrie - 97 -
AGES 30 31 32 33 34 35 36 37 38 39
101 53.3 52.4 51.4 50.4 49.5 48.5 47.5 46.5 45.6 44.6
102 53.3 52.4 51.4 50.4 49.5 48.5 47.5 46.5 45.6 44.6
103 53.3 52.4 51.4 50.4 49.5 48.5 47.5 46.5 45.6 44.6
104 53.3 52.4 51.4 50.4 49.5 48.5 47.5 46.5 45.6 44.6
105 53.3 52.4 51.4 50.4 49.4 48.5 47.5 46.5 45.6 44.6
106 53.3 52.4 51.4 50.4 49.4 48.5 47.5 46.5 45.6 44.6
107 53.3 52.4 51.4 50.4 49.4 48.5 47.5 46.5 45.6 44.6
108 53.3 52.4 51.4 50.4 49.4 48.5 47.5 46.5 45.6 44.6
109 53.3 52.4 51.4 50.4 49.4 48.5 47.5 46.5 45.6 44.6
110 53.3 52.4 51.4 50.4 49.4 48.5 47.5 46.5 45.6 44.6
111 53.3 52.4 51.4 50.4 49.4 48.5 47.5 46.5 45.6 44.6
112 53.3 52.4 51.4 50.4 49.4 48.5 47.5 46.5 45.6 44.6
113 53.3 52.4 51.4 50.4 49.4 48.5 47.5 46.5 45.6 44.6
114 53.3 52.4 51.4 50.4 49.4 48.5 47.5 46.5 45.6 44.6
115+ 53.3 52.4 51.4 50.4 49.4 48.5 47.5 46.5 45.6 44.6
AGES 40 41 42 43 44 45 46 47 48 49
40 50.2 49.8 49.3 48.9 48.5 48.1 47.7 47.4 47.1 46.8
41 49.8 49.3 48.8 48.3 47.9 47.5 47.1 46.7 46.4 46.1
42 49.3 48.8 48.3 47.8 47.3 46.9 46.5 46.1 45.8 45.4
43 48.9 48.3 47.8 47.3 46.8 46.3 45.9 45.5 45.1 44.8
44 48.5 47.9 47.3 46.8 46.3 45.8 45.4 44.9 44.5 44.2
45 48.1 47.5 46.9 46.3 45.8 45.3 44.8 44.4 44.0 43.6
46 47.7 47.1 46.5 45.9 45.4 44.8 44.3 43.9 43.4 43.0
47 47.4 46.7 46.1 45.5 44.9 44.4 43.9 43.4 42.9 42.4
48 47.1 46.4 45.8 45.1 44.5 44.0 43.4 42.9 42.4 41.9
49 46.8 46.1 45.4 44.8 44.2 43.6 43.0 42.4 41.9 41.4
50 46.5 45.8 45.1 44.4 43.8 43.2 42.6 42.0 41.5 40.9
51 46.3 45.5 44.8 44.1 43.5 42.8 42.2 41.6 41.0 40.5
52 46.0 45.3 44.6 43.8 43.2 42.5 41.8 41.2 40.6 40.1
53 45.8 45.1 44.3 43.6 42.9 42.2 41.5 40.9 40.3 39.7
54 45.6 44.8 44.1 43.3 42.6 41.9 41.2 40.5 39.9 39.3
55 45.5 44.7 43.9 43.1 42.4 41.6 40.9 40.2 39.6 38.9
56 45.3 44.5 43.7 42.9 42.1 41.4 40.7 40.0 39.3 38.6
57 45.1 44.3 43.5 42.7 41.9 41.2 40.4 39.7 39.0 38.3
58 45.0 44.2 43.3 42.5 41.7 40.9 40.2 39.4 38.7 38.0
59 44.9 44.0 43.2 42.4 41.5 40.7 40.0 39.2 38.5 37.8
60 44.7 43.9 43.0 42.2 41.4 40.6 39.8 39.0 38.2 37.5
61 44.6 43.8 42.9 42.1 41.2 40.4 39.6 38.8 38.0 37.3
62 44.5 43.7 42.8 41.9 41.1 40.3 39.4 38.6 37.8 37.1
63 44.5 43.6 42.7 41.8 41.0 40.1 39.3 38.5 37.7 36.9
64 44.4 43.5 42.6 41.7 40.8 40.0 39.2 38.3 37.5 36.7
65 44.3 43.4 42.5 41.6 40.7 39.9 39.0 38.2 37.4 36.6
66 44.2 43.3 42.4 41.5 40.6 39.8 38.9 38.1 37.2 36.4
Copyright 2013, Gair B. Petrie - 98 -
AGES 40 41 42 43 44 45 46 47 48 49
67 44.2 43.3 42.3 41.4 40.6 39.7 38.8 38.0 37.1 36.3
68 44.1 43.2 42.3 41.4 40.5 39.6 38.7 37.9 37.0 36.2
69 44.1 43.1 42.2 41.3 40.4 39.5 38.6 37.8 36.9 36.0
70 44.0 43.1 42.2 41.3 40.3 39.4 38.6 37.7 36.8 35.9
71 44.0 43.0 42.1 41.2 40.3 39.4 38.5 37.6 36.7 35.9
72 43.9 43.0 42.1 41.1 40.2 39.3 38.4 37.5 36.6 35.8
73 43.9 43.0 42.0 41.1 40.2 39.3 38.4 37.5 36.6 35.7
74 43.9 42.9 42.0 41.1 40.1 39.2 38.3 37.4 36.5 35.6
75 43.8 42.9 42.0 41.0 40.1 39.2 38.3 37.4 36.5 35.6
76 43.8 42.9 41.9 41.0 40.1 39.1 38.2 37.3 36.4 35.5
77 43.8 42.9 41.9 41.0 40.0 39.1 38.2 37.3 36.4 35.5
78 43.8 42.8 41.9 40.9 40.0 39.1 38.2 37.2 36.3 35.4
79 43.8 42.8 41.9 40.9 40.0 39.1 38.1 37.2 36.3 35.4
80 43.7 42.8 41.8 40.9 40.0 39.0 38.1 37.2 36.3 35.4
81 43.7 42.8 41.8 40.9 39.9 39.0 38.1 37.2 36.2 35.3
82 43.7 42.8 41.8 40.9 39.9 39.0 38.1 37.1 36.2 35.3
83 43.7 42.8 41.8 40.9 39.9 39.0 38.0 37.1 36.2 35.3
84 43.7 42.7 41.8 40.8 39.9 39.0 38.0 37.1 36.2 35.3
85 43.7 42.7 41.8 40.8 39.9 38.9 38.0 37.1 36.2 35.2
86 43.7 42.7 41.8 40.8 39.9 38.9 38.0 37.1 36.1 35.2
87 43.7 42.7 41.8 40.8 39.9 38.9 38.0 37.0 36.1 35.2
88 43.7 42.7 41.8 40.8 39.9 38.9 38.0 37.0 36.1 35.2
89 43.7 42.7 41.7 40.8 39.8 38.9 38.0 37.0 36.1 35.2
90 43.7 42.7 41.7 40.8 39.8 38.9 38.0 37.0 36.1 35.2
91 43.7 42.7 41.7 40.8 39.8 38.9 37.9 37.0 36.1 35.2
92 43.7 42.7 41.7 40.8 39.8 38.9 37.9 37.0 36.1 35.1
93 43.7 42.7 41.7 40.8 39.8 38.9 37.9 37.0 36.1 35.1
94 43.7 42.7 41.7 40.8 39.8 38.9 37.9 37.0 36.1 35.1
95 43.6 42.7 41.7 40.8 39.8 38.9 37.9 37.0 36.1 35.1
96 43.6 42.7 41.7 40.8 39.8 38.9 37.9 37.0 36.1 35.1
97 43.6 42.7 41.7 40.8 39.8 38.9 37.9 37.0 36.1 35.1
98 43.6 42.7 41.7 40.8 39.8 38.9 37.9 37.0 36.0 35.1
99 43.6 42.7 41.7 40.8 39.8 38.9 37.9 37.0 36.0 35.1
100 43.6 42.7 41.7 40.8 39.8 38.9 37.9 37.0 36.0 35.1
101 43.6 42.7 41.7 40.8 39.8 38.9 37.9 37.0 36.0 35.1
102 43.6 42.7 41.7 40.8 39.8 38.9 37.9 37.0 36.0 35.1
103 43.6 42.7 41.7 40.8 39.8 38.9 37.9 37.0 36.0 35.1
104 43.6 42.7 41.7 40.8 39.8 38.8 37.9 37.0 36.0 35.1
105 43.6 42.7 41.7 40.8 39.8 38.8 37.9 37.0 36.0 35.1
106 43.6 42.7 41.7 40.8 39.8 38.8 37.9 37.0 36.0 35.1
107 43.6 42.7 41.7 40.8 39.8 38.8 37.9 37.0 36.0 35.1
108 43.6 42.7 41.7 40.8 39.8 38.8 37.9 37.0 36.0 35.1
109 43.6 42.7 41.7 40.7 39.8 38.8 37.9 37.0 36.0 35.1
110 43.6 42.7 41.7 40.7 39.8 38.8 37.9 37.0 36.0 35.1
Copyright 2013, Gair B. Petrie - 99 -
AGES 40 41 42 43 44 45 46 47 48 49
111 43.6 42.7 41.7 40.7 39.8 38.8 37.9 37.0 36.0 35.1
112 43.6 42.7 41.7 40.7 39.8 38.8 37.9 37.0 36.0 35.1
113 43.6 42.7 41.7 40.7 39.8 38.8 37.9 37.0 36.0 35.1
114 43.6 42.7 41.7 40.7 39.8 38.8 37.9 37.0 36.0 35.1
115+ 43.6 42.7 41.7 40.7 39.8 38.8 37.9 37.0 36.0 35.1
AGES 50 51 52 53 54 55 56 57 58 59
50 40.4 40.0 39.5 39.1 38.7 38.3 38.0 37.6 37.3 37.1
51 40.0 39.5 39.0 38.5 38.1 37.7 37.4 37.0 36.7 36.4
52 39.5 39.0 38.5 38.0 37.6 37.2 36.8 36.4 36.0 35.7
53 39.1 38.5 38.0 37.5 37.1 36.6 36.2 35.8 35.4 35.1
54 38.7 38.1 37.6 37.1 36.6 36.1 35.7 35.2 34.8 34.5
55 38.3 37.7 37.2 36.6 36.1 35.6 35.1 34.7 34.3 33.9
56 38.0 37.4 36.8 36.2 35.7 35.1 34.7 34.2 33.7 33.3
57 37.6 37.0 36.4 35.8 35.2 34.7 34.2 33.7 33.2 32.8
58 37.3 36.7 36.0 35.4 34.8 34.3 33.7 33.2 32.8 32.3
59 37.1 36.4 35.7 35.1 34.5 33.9 33.3 32.8 32.3 31.8
60 36.8 36.1 35.4 34.8 34.1 33.5 32.9 32.4 31.9 31.3
61 36.6 35.8 35.1 34.5 33.8 33.2 32.6 32.0 31.4 30.9
62 36.3 35.6 34.9 34.2 33.5 32.9 32.2 31.6 31.1 30.5
63 36.1 35.4 34.6 33.9 33.2 32.6 31.9 31.3 30.7 30.1
64 35.9 35.2 34.4 33.7 33.0 32.3 31.6 31.0 30.4 29.8
65 35.8 35.0 34.2 33.5 32.7 32.0 31.4 30.7 30.0 29.4
66 35.6 34.8 34.0 33.3 32.5 31.8 31.1 30.4 29.8 29.1
67 35.5 34.7 33.9 33.1 32.3 31.6 30.9 30.2 29.5 28.8
68 35.3 34.5 33.7 32.9 32.1 31.4 30.7 29.9 29.2 28.6
69 35.2 34.4 33.6 32.8 32.0 31.2 30.5 29.7 29.0 28.3
70 35.1 34.3 33.4 32.6 31.8 31.1 30.3 29.5 28.8 28.1
71 35.0 34.2 33.3 32.5 31.7 30.9 30.1 29.4 28.6 27.9
72 34.9 34.1 33.2 32.4 31.6 30.8 30.0 29.2 28.4 27.7
73 34.8 34.0 33.1 32.3 31.5 30.6 29.8 29.1 28.3 27.5
74 34.8 33.9 33.0 32.2 31.4 30.5 29.7 28.9 28.1 27.4
75 34.7 33.8 33.0 32.1 31.3 30.4 29.6 28.8 28.0 27.2
76 34.6 33.8 32.9 32.0 31.2 30.3 29.5 28.7 27.9 27.1
77 34.6 33.7 32.8 32.0 31.1 30.3 29.4 28.6 27.8 27.0
78 34.5 33.6 32.8 31.9 31.0 30.2 29.3 28.5 27.7 26.9
79 34.5 33.6 32.7 31.8 31.0 30.1 29.3 28.4 27.6 26.8
80 34.5 33.6 32.7 31.8 30.9 30.1 29.2 28.4 27.5 26.7
81 34.4 33.5 32.6 31.8 30.9 30.0 29.2 28.3 27.5 26.6
82 34.4 33.5 32.6 31.7 30.8 30.0 29.1 28.3 27.4 26.6
83 34.4 33.5 32.6 31.7 30.8 29.9 29.1 28.2 27.4 26.5
84 34.3 33.4 32.5 31.7 30.8 29.9 29.0 28.2 27.3 26.5
85 34.3 33.4 32.5 31.6 30.7 29.9 29.0 28.1 27.3 26.4
86 34.3 33.4 32.5 31.6 30.7 29.8 29.0 28.1 27.2 26.4
Copyright 2013, Gair B. Petrie - 100 -
AGES 50 51 52 53 54 55 56 57 58 59
87 34.3 33.4 32.5 31.6 30.7 29.8 28.9 28.1 27.2 26.4
88 34.3 33.4 32.5 31.6 30.7 29.8 28.9 28.0 27.2 26.3
89 34.3 33.3 32.4 31.5 30.7 29.8 28.9 28.0 27.2 26.3
90 34.2 33.3 32.4 31.5 30.6 29.8 28.9 28.0 27.1 26.3
91 34.2 33.3 32.4 31.5 30.6 29.7 28.9 28.0 27.1 26.3
92 34.2 33.3 32.4 31.5 30.6 29.7 28.8 28.0 27.1 26.2
93 34.2 33.3 32.4 31.5 30.6 29.7 28.8 28.0 27.1 26.2
94 34.2 33.3 32.4 31.5 30.6 29.7 28.8 27.9 27.1 26.2
95 34.2 33.3 32.4 31.5 30.6 29.7 28.8 27.9 27.1 26.2
96 34.2 33.3 32.4 31.5 30.6 29.7 28.8 27.9 27.0 26.2
97 34.2 33.3 32.4 31.5 30.6 29.7 28.8 27.9 27.0 26.2
98 34.2 33.3 32.4 31.5 30.6 29.7 28.8 27.9 27.0 26.2
99 34.2 33.3 32.4 31.5 30.6 29.7 28.8 27.9 27.0 26.2
100 34.2 33.3 32.4 31.5 30.6 29.7 28.8 27.9 27.0 26.1
101 34.2 33.3 32.4 31.5 30.6 29.7 28.8 27.9 27.0 26.1
102 34.2 33.3 32.4 31.4 30.5 29.7 28.8 27.9 27.0 26.1
103 34.2 33.3 32.4 31.4 30.5 29.7 28.8 27.9 27.0 26.1
104 34.2 33.3 32.4 31.4 30.5 29.6 28.8 27.9 27.0 26.1
105 34.2 33.3 32.3 31.4 30.5 29.6 28.8 27.9 27.0 26.1
106 34.2 33.3 32.3 31.4 30.5 29.6 28.8 27.9 27.0 26.1
107 34.2 33.3 32.3 31.4 30.5 29.6 28.8 27.9 27.0 26.1
108 34.2 33.3 32.3 31.4 30.5 29.6 28.8 27.9 27.0 26.1
109 34.2 33.3 32.3 31.4 30.5 29.6 28.7 27.9 27.0 26.1
110 34.2 33.3 32.3 31.4 30.5 29.6 28.7 27.9 27.0 26.1
111 34.2 33.3 32.3 31.4 30.5 29.6 28.7 27.9 27.0 26.1
112 34.2 33.3 32.3 31.4 30.5 29.6 28.7 27.9 27.0 26.1
113 34.2 33.3 32.3 31.4 30.5 29.6 28.7 27.9 27.0 26.1
114 34.2 33.3 32.3 31.4 30.5 29.6 28.7 27.9 27.0 26.1
115+ 34.2 33.3 32.3 31.4 30.5 29.6 28.7 27.9 27.0 26.1
AGES 60 61 62 63 64 65 66 67 68 69
60 30.9 30.4 30.0 29.6 29.2 28.8 28.5 28.2 27.9 27.6
61 30.4 29.9 29.5 29.0 28.6 28.3 27.9 27.6 27.3 27.0
62 30.0 29.5 29.0 28.5 28.1 27.7 27.3 27.0 26.7 26.4
63 29.6 29.0 28.5 28.1 27.6 27.2 26.8 26.4 26.1 25.7
64 29.2 28.6 28.1 27.6 27.1 26.7 26.3 25.9 25.5 25.2
65 28.8 28.3 27.7 27.2 26.7 26.2 25.8 25.4 25.0 24.6
66 28.5 27.9 27.3 26.8 26.3 25.8 25.3 24.9 24.5 24.1
67 28.2 27.6 27.0 26.4 25.9 25.4 24.9 24.4 24.0 23.6
68 27.9 27.3 26.7 26.1 25.5 25.0 24.5 24.0 23.5 23.1
69 27.6 27.0 26.4 25.7 25.2 24.6 24.1 23.6 23.1 22.6
70 27.4 26.7 26.1 25.4 24.8 24.3 23.7 23.2 22.7 22.2
71 27.2 26.5 25.8 25.2 24.5 23.9 23.4 22.8 22.3 21.8
72 27.0 26.3 25.6 24.9 24.3 23.7 23.1 22.5 22.0 21.4
Copyright 2013, Gair B. Petrie - 101 -
AGES 60 61 62 63 64 65 66 67 68 69
73 26.8 26.1 25.4 24.7 24.0 23.4 22.8 22.2 21.6 21.1
74 26.6 25.9 25.2 24.5 23.8 23.1 22.5 21.9 21.3 20.8
75 26.5 25.7 25.0 24.3 23.6 22.9 22.3 21.6 21.0 20.5
76 26.3 25.6 24.8 24.1 23.4 22.7 22.0 21.4 20.8 20.2
77 26.2 25.4 24.7 23.9 23.2 22.5 21.8 21.2 20.6 19.9
78 26.1 25.3 24.6 23.8 23.1 22.4 21.7 21.0 20.3 19.7
79 26.0 25.2 24.4 23.7 22.9 22.2 21.5 20.8 20.1 19.5
80 25.9 25.1 24.3 23.6 22.8 22.1 21.3 20.6 20.0 19.3
81 25.8 25.0 24.2 23.4 22.7 21.9 21.2 20.5 19.8 19.1
82 25.8 24.9 24.1 23.4 22.6 21.8 21.1 20.4 19.7 19.0
83 25.7 24.9 24.1 23.3 22.5 21.7 21.0 20.2 19.5 18.8
84 25.6 24.8 24.0 23.2 22.4 21.6 20.9 20.1 19.4 18.7
85 25.6 24.8 23.9 23.1 22.3 21.6 20.8 20.1 19.3 18.6
86 25.5 24.7 23.9 23.1 22.3 21.5 20.7 20.0 19.2 18.5
87 25.5 24.7 23.8 23.0 22.2 21.4 20.7 19.9 19.2 18.4
88 25.5 24.6 23.8 23.0 22.2 21.4 20.6 19.8 19.1 18.3
89 25.4 24.6 23.8 22.9 22.1 21.3 20.5 19.8 19.0 18.3
90 25.4 24.6 23.7 22.9 22.1 21.3 20.5 19.7 19.0 18.2
91 25.4 24.5 23.7 22.9 22.1 21.3 20.5 19.7 18.9 18.2
92 25.4 24.5 23.7 22.9 22.0 21.2 20.4 19.6 18.9 18.1
93 25.4 24.5 23.7 22.8 22.0 21.2 20.4 19.6 18.8 18.1
94 25.3 24.5 23.6 22.8 22.0 21.2 20.4 19.6 18.8 18.0
95 25.3 24.5 23.6 22.8 22.0 21.1 20.3 19.6 18.8 18.0
96 25.3 24.5 23.6 22.8 21.9 21.1 20.3 19.5 18.8 18.0
97 25.3 24.5 23.6 22.8 21.9 21.1 20.3 19.5 18.7 18.0
98 25.3 24.4 23.6 22.8 21.9 21.1 20.3 19.5 18.7 17.9
99 25.3 24.4 23.6 22.7 21.9 21.1 20.3 19.5 18.7 17.9
100 25.3 24.4 23.6 22.7 21.9 21.1 20.3 19.5 18.7 17.9
101 25.3 24.4 23.6 22.7 21.9 21.1 20.2 19.4 18.7 17.9
102 25.3 24.4 23.6 22.7 21.9 21.1 20.2 19.4 18.6 17.9
103 25.3 24.4 23.6 22.7 21.9 21.0 20.2 19.4 18.6 17.9
104 25.3 24.4 23.5 22.7 21.9 21.0 20.2 19.4 18.6 17.8
105 25.3 24.4 23.5 22.7 21.9 21.0 20.2 19.4 18.6 17.8
106 25.3 24.4 23.5 22.7 21.9 21.0 20.2 19.4 18.6 17.8
107 25.2 24.4 23.5 22.7 21.8 21.0 20.2 19.4 18.6 17.8
108 25.2 24.4 23.5 22.7 21.8 21.0 20.2 19.4 18.6 17.8
109 25.2 24.4 23.5 22.7 21.8 21.0 20.2 19.4 18.6 17.8
110 25.2 24.4 23.5 22.7 21.8 21.0 20.2 19.4 18.6 17.8
111 25.2 24.4 23.5 22.7 21.8 21.0 20.2 19.4 18.6 17.8
112 25.2 24.4 23.5 22.7 21.8 21.0 20.2 19.4 18.6 17.8
113 25.2 24.4 23.5 22.7 21.8 21.0 20.2 19.4 18.6 17.8
114 25.2 24.4 23.5 22.7 21.8 21.0 20.2 19.4 18.6 17.8
115+ 25.2 24.4 23.5 22.7 21.8 21.0 20.2 19.4 18.6 17.8
Copyright 2013, Gair B. Petrie - 102 -
AGES 70 71 72 73 74 75 76 77 78 79
70 21.8 21.3 20.9 20.6 20.2 19.9 19.6 19.4 19.1 18.9
71 21.3 20.9 20.5 20.1 19.7 19.4 19.1 18.8 18.5 18.3
72 20.9 20.5 20.0 19.6 19.3 18.9 18.6 18.3 18.0 17.7
73 20.6 20.1 19.6 19.2 18.8 18.4 18.1 17.8 17.5 17.2
74 20.2 19.7 19.3 18.8 18.4 18.0 17.6 17.3 17.0 16.7
75 19.9 19.4 18.9 18.4 18.0 17.6 17.2 16.8 16.5 16.2
76 19.6 19.1 18.6 18.1 17.6 17.2 16.8 16.4 16.0 15.7
77 19.4 18.8 18.3 17.8 17.3 16.8 16.4 16.0 15.6 15.3
78 19.1 18.5 18.0 17.5 17.0 16.5 16.0 15.6 15.2 14.9
79 18.9 18.3 17.7 17.2 16.7 16.2 15.7 15.3 14.9 14.5
80 18.7 18.1 17.5 16.9 16.4 15.9 15.4 15.0 14.5 14.1
81 18.5 17.9 17.3 16.7 16.2 15.6 15.1 14.7 14.2 13.8
82 18.3 17.7 17.1 16.5 15.9 15.4 14.9 14.4 13.9 13.5
83 18.2 17.5 16.9 16.3 15.7 15.2 14.7 14.2 13.7 13.2
84 18.0 17.4 16.7 16.1 15.5 15.0 14.4 13.9 13.4 13.0
85 17.9 17.3 16.6 16.0 15.4 14.8 14.3 13.7 13.2 12.8
86 17.8 17.1 16.5 15.8 15.2 14.6 14.1 13.5 13.0 12.5
87 17.7 17.0 16.4 15.7 15.1 14.5 13.9 13.4 12.9 12.4
88 17.6 16.9 16.3 15.6 15.0 14.4 13.8 13.2 12.7 12.2
89 17.6 16.9 16.2 15.5 14.9 14.3 13.7 13.1 12.6 12.0
90 17.5 16.8 16.1 15.4 14.8 14.2 13.6 13.0 12.4 11.9
91 17.4 16.7 16.0 15.4 14.7 14.1 13.5 12.9 12.3 11.8
92 17.4 16.7 16.0 15.3 14.6 14.0 13.4 12.8 12.2 11.7
93 17.3 16.6 15.9 15.2 14.6 13.9 13.3 12.7 12.1 11.6
94 17.3 16.6 15.9 15.2 14.5 13.9 13.2 12.6 12.0 11.5
95 17.3 16.5 15.8 15.1 14.5 13.8 13.2 12.6 12.0 11.4
96 17.2 16.5 15.8 15.1 14.4 13.8 13.1 12.5 11.9 11.3
97 17.2 16.5 15.8 15.1 14.4 13.7 13.1 12.5 11.9 11.3
98 17.2 16.4 15.7 15.0 14.3 13.7 13.0 12.4 11.8 11.2
99 17.2 16.4 15.7 15.0 14.3 13.6 13.0 12.4 11.8 11.2
100 17.1 16.4 15.7 15.0 14.3 13.6 12.9 12.3 11.7 11.1
101 17.1 16.4 15.6 14.9 14.2 13.6 12.9 12.3 11.7 11.1
102 17.1 16.4 15.6 14.9 14.2 13.5 12.9 12.2 11.6 11.0
103 17.1 16.3 15.6 14.9 14.2 13.5 12.9 12.2 11.6 11.0
104 17.1 16.3 15.6 14.9 14.2 13.5 12.8 12.2 11.6 11.0
105 17.1 16.3 15.6 14.9 14.2 13.5 12.8 12.2 11.5 10.9
106 17.1 16.3 15.6 14.8 14.1 13.5 12.8 12.2 11.5 10.9
107 17.0 16.3 15.6 14.8 14.1 13.4 12.8 12.1 11.5 10.9
108 17.0 16.3 15.5 14.8 14.1 13.4 12.8 12.1 11.5 10.9
109 17.0 16.3 15.5 14.8 14.1 13.4 12.8 12.1 11.5 10.9
110 17.0 16.3 15.5 14.8 14.1 13.4 12.7 12.1 11.5 10.9
111 17.0 16.3 15.5 14.8 14.1 13.4 12.7 12.1 11.5 10.8
112 17.0 16.3 15.5 14.8 14.1 13.4 12.7 12.1 11.5 10.8
113 17.0 16.3 15.5 14.8 14.1 13.4 12.7 12.1 11.4 10.8
Copyright 2013, Gair B. Petrie - 103 -
AGES 70 71 72 73 74 75 76 77 78 79
114 17.0 16.3 15.5 14.8 14.1 13.4 12.7 12.1 11.4 10.8
115+ 17.0 16.3 15.5 14.8 14.1 13.4 12.7 12.1 11.4 10.8
AGES 80 81 82 83 84 85 86 87 88 89
80 13.8 13.4 13.1 12.8 12.6 12.3 12.1 11.9 11.7 11.5
81 13.4 13.1 12.7 12.4 12.2 11.9 11.7 11.4 11.3 11.1
82 13.1 12.7 12.4 12.1 11.8 11.5 11.3 11.0 10.8 10.6
83 12.8 12.4 12.1 11.7 11.4 11.1 10.9 10.6 10.4 10.2
84 12.6 12.2 11.8 11.4 11.1 10.8 10.5 10.3 10.1 9.9
85 12.3 11.9 11.5 11.1 10.8 10.5 10.2 9.9 9.7 9.5
86 12.1 11.7 11.3 10.9 10.5 10.2 9.9 9.6 9.4 9.2
87 11.9 11.4 11.0 10.6 10.3 9.9 9.6 9.4 9.1 8.9
88 11.7 11.3 10.8 10.4 10.1 9.7 9.4 9.1 8.8 8.6
89 11.5 11.1 10.6 10.2 9.9 9.5 9.2 8.9 8.6 8.3
90 11.4 10.9 10.5 10.1 9.7 9.3 9.0 8.6 8.3 8.1
91 11.3 10.8 10.3 9.9 9.5 9.1 8.8 8.4 8.1 7.9
92 11.2 10.7 10.2 9.8 9.3 9.0 8.6 8.3 8.0 7.7
93 11.1 10.6 10.1 9.6 9.2 8.8 8.5 8.1 7.8 7.5
94 11.0 10.5 10.0 9.5 9.1 8.7 8.3 8.0 7.6 7.3
95 10.9 10.4 9.9 9.4 9.0 8.6 8.2 7.8 7.5 7.2
96 10.8 10.3 9.8 9.3 8.9 8.5 8.1 7.7 7.4 7.1
97 10.7 10.2 9.7 9.2 8.8 8.4 8.0 7.6 7.3 6.9
98 10.7 10.1 9.6 9.2 8.7 8.3 7.9 7.5 7.1 6.8
99 10.6 10.1 9.6 9.1 8.6 8.2 7.8 7.4 7.0 6.7
100 10.6 10.0 9.5 9.0 8.5 8.1 7.7 7.3 6.9 6.6
101 10.5 10.0 9.4 9.0 8.5 8.0 7.6 7.2 6.9 6.5
102 10.5 9.9 9.4 8.9 8.4 8.0 7.5 7.1 6.8 6.4
103 10.4 9.9 9.4 8.8 8.4 7.9 7.5 7.1 6.7 6.3
104 10.4 9.8 9.3 8.8 8.3 7.9 7.4 7.0 6.6 6.3
105 10.4 9.8 9.3 8.8 8.3 7.8 7.4 7.0 6.6 6.2
106 10.3 9.8 9.2 8.7 8.2 7.8 7.3 6.9 6.5 6.2
107 10.3 9.8 9.2 8.7 8.2 7.7 7.3 6.9 6.5 6.1
108 10.3 9.7 9.2 8.7 8.2 7.7 7.3 6.8 6.4 6.1
109 10.3 9.7 9.2 8.7 8.2 7.7 7.2 6.8 6.4 6.0
110 10.3 9.7 9.2 8.6 8.1 7.7 7.2 6.8 6.4 6.0
111 10.3 9.7 9.1 8.6 8.1 7.6 7.2 6.8 6.3 6.0
112 10.2 9.7 9.1 8.6 8.1 7.6 7.2 6.7 6.3 5.9
113 10.2 9.7 9.1 8.6 8.1 7.6 7.2 6.7 6.3 5.9
114 10.2 9.7 9.1 8.6 8.1 7.6 7.1 6.7 6.3 5.9
115+ 10.2 9.7 9.1 8.6 8.1 7.6 7.1 6.7 6.3 5.9
AGES 90 91 92 93 94 95 96 97 98 99
90 7.8 7.6 7.4 7.2 7.1 6.9 6.8 6.6 6.5 6.4
91 7.6 7.4 7.2 7.0 6.8 6.7 6.5 6.4 6.3 6.1
Copyright 2013, Gair B. Petrie - 104 -
AGES 90 91 92 93 94 95 96 97 98 99
92 7.4 7.2 7.0 6.8 6.6 6.4 6.3 6.1 6.0 5.9
93 7.2 7.0 6.8 6.6 6.4 6.2 6.1 5.9 5.8 5.6
94 7.1 6.8 6.6 6.4 6.2 6.0 5.9 5.7 5.6 5.4
95 6.9 6.7 6.4 6.2 6.0 5.8 5.7 5.5 5.4 5.2
96 6.8 6.5 6.3 6.1 5.9 5.7 5.5 5.3 5.2 5.0
97 6.6 6.4 6.1 5.9 5.7 5.5 5.3 5.2 5.0 4.9
98 6.5 6.3 6.0 5.8 5.6 5.4 5.2 5.0 4.8 4.7
99 6.4 6.1 5.9 5.6 5.4 5.2 5.0 4.9 4.7 4.5
100 6.3 6.0 5.8 5.5 5.3 5.1 4.9 4.7 4.5 4.4
101 6.2 5.9 5.6 5.4 5.2 5.0 4.8 4.6 4.4 4.2
102 6.1 5.8 5.5 5.3 5.1 4.8 4.6 4.4 4.3 4.1
103 6.0 5.7 5.4 5.2 5.0 4.7 4.5 4.3 4.1 4.0
104 5.9 5.6 5.4 5.1 4.9 4.6 4.4 4.2 4.0 3.8
105 5.9 5.6 5.3 5.0 4.8 4.5 4.3 4.1 3.9 3.7
106 5.8 5.5 5.2 4.9 4.7 4.5 4.2 4.0 3.8 3.6
107 5.8 5.4 5.1 4.9 4.6 4.4 4.2 3.9 3.7 3.5
108 5.7 5.4 5.1 4.8 4.6 4.3 4.1 3.9 3.7 3.5
109 5.7 5.3 5.0 4.8 4.5 4.3 4.0 3.8 3.6 3.4
110 5.6 5.3 5.0 4.7 4.5 4.2 4.0 3.8 3.5 3.3
111 5.6 5.3 5.0 4.7 4.4 4.2 3.9 3.7 3.5 3.3
112 5.6 5.3 4.9 4.7 4.4 4.1 3.9 3.7 3.5 3.2
113 5.6 5.2 4.9 4.6 4.4 4.1 3.9 3.6 3.4 3.2
114 5.6 5.2 4.9 4.6 4.3 4.1 3.9 3.6 3.4 3.2
115+ 5.5 5.2 4.9 4.6 4.3 4.1 3.8 3.6 3.4 3.1
AGES 100 101 102 103 104 105 106 107 108 109
100 4.2 4.1 3.9 3.8 3.7 3.5 3.4 3.3 3.3 3.2
101 4.1 3.9 3.7 3.6 3.5 3.4 3.2 3.1 3.1 3.0
102 3.9 3.7 3.6 3.4 3.3 3.2 3.1 3.0 2.9 2.8
103 3.8 3.6 3.4 3.3 3.2 3.0 2.9 2.8 2.7 2.6
104 3.7 3.5 3.3 3.2 3.0 2.9 2.7 2.6 2.5 2.4
105 3.5 3.4 3.2 3.0 2.9 2.7 2.6 2.5 2.4 2.3
106 3.4 3.2 3.1 2.9 2.7 2.6 2.4 2.3 2.2 2.1
107 3.3 3.1 3.0 2.8 2.6 2.5 2.3 2.2 2.1 2.0
108 3.3 3.1 2.9 2.7 2.5 2.4 2.2 2.1 1.9 1.8
109 3.2 3.0 2.8 2.6 2.4 2.3 2.1 2.0 1.8 1.7
110 3.1 2.9 2.7 2.5 2.3 2.2 2.0 1.9 1.7 1.6
111 3.1 2.9 2.7 2.5 2.3 2.1 1.9 1.8 1.6 1.5
112 3.0 2.8 2.6 2.4 2.2 2.0 1.9 1.7 1.5 1.4
113 3.0 2.8 2.6 2.4 2.2 2.0 1.8 1.6 1.5 1.3
114 3.0 2.7 2.5 2.3 2.1 1.9 1.8 1.6 1.4 1.3
115+ 2.9 2.7 2.5 2.3 2.1 1.9 1.7 1.5 1.4 1.2
Copyright 2013, Gair B. Petrie - 105 -
AGES ` 110 111 112 113 114 115+
110 1.5 1.4 1.3 1.2 1.1 1.1
111 1.4 1.2 1.1 1.1 1.0 1.0
112 1.3 1.1 1.0 1.0 1.0 1.0
113 1.2 1.1 1.0 1.0 1.0 1.0
114 1.1 1.0 1.0 1.0 1.0 1.0
115+ 1.1 1.0 1.0 1.0 1.0 1.0
Q-4. May the tables under this section be changed?
A-4. The Single Life Table, Uniform Lifetime Table and Joint and Last Survivor Table provided
in A-1 through A-3 of this section may be changed by the Commissioner in revenue rulings,
notices, and other guidance published in the Internal Revenue Bulletin. See §601.601(d)(2)(ii)(b)
of this chapter.